Lord Radice: My Lords, my sub-committee is extremely grateful that we are able to debate our report on the future financing of the European Union at such a crucial moment in European affairs.
	I should like to begin by thanking all my sub-committee colleagues for their hard work and the members and chairman of the European Union Committee for their support. I should also like to thank our Clerk, Judith Brooke, our European Committee specialist, Oriel Petry, and our specialist adviser, John Peet, for their help in drawing up the report.
	My task this afternoon, as chairman of the sub-committee, is to spend most of my speech outlining the main conclusions of our report. But after the result of the French and Dutch referendums, it would be quite wrong if I did not refer to the new situation in which decisions about the seven-year financial package, from 2007 to 2013, will be taken, although obviously my remarks are my own rather than those of the committee.
	I remain a supporter of the European constitutional treaty on the grounds of greater efficiency, accountability and openness. However, my view is that following the French and Dutch "No" votes, the constitutional treaty is dead, at least in its present form. No doubt people in France and the Netherlands voted "No" for different reasons, some of which have little directly to do with the treaty. But the fact is, the majority voted "No" in both countries by substantial margins and a second vote on the existing treaty in either country is surely inconceivable. In these circumstances, the treaty in its present form should be withdrawn or at least put in cold storage.
	A big responsibility now rests with the United Kingdom, which takes over the presidency of the European Union on 1 July. I hope that, without displaying a trace of schadenfreude, the Government will help other member states face up to the reality of what has happened, draw lessons from the French and Dutch rejection and, if possible, address the voters' discontent.
	One of the key issues for the UK presidency is likely to be the seven-year financial package. We start from the position that the budget is, and should remain, a small percentage of European Union gross national income. As our report shows, it has actually fallen from 1.05 per cent in 1992 to 0.98 per cent in 2003. The overwhelming amount of public spending is, of course, at national level. Some 2 to 2.5 per cent is spent at European level compared with the national EU average of 48.5 per cent. That gives the relativities very well.
	Much of EU policy is, in any case, better carried out at national level. For example, as we say in our report, achieving the so-called Lisbon goals of faster growth, more and better jobs and greater social cohesion must rely for the most part on economic and social reforms which are the responsibility of individual member states. But there are some areas in which resources can be usefully spent at European level, provided that these genuinely add value. For example, our report argues for European programmes in research and development, education and infrastructure to back up the so-called Lisbon agenda. As we also note in our report, the Sapir committee, set up by the former president of the Commission to look at the budget, proposed a European restructuring fund for workers thrown out of employment as a result of sudden economic change.
	However—and this is our first very substantial point—we are very critical of the way in which the budget is presently constructed. Too much of it is a historic relic which fails to focus on the European Union's current priorities and needs. We are especially critical of the continued predominance of the common agricultural policy in the budget. In this context, we consider the Franco-German deal subsequently endorsed by the European Council in 2002 to fix the level of agricultural support payments until 2013 to be highly regrettable. As we say, it is essential that these figures should be treated as ceilings for expenditure, not as targets.
	We strongly back recent reforms to the CAP and believe that the new system of direct income support strengthens the argument for shifting at least some of the burden of financing the CAP back towards the member states. We note with interest that the Sapir report argued for cutting agricultural support from around 40 per cent of the EU budget to 15 per cent of the total budget. Speaking for myself, that is the right kind of proportion.
	We are also critical of the Commission's conservative approach to EU structural and regional funding. We think it is quite wrong that 50 per cent of the structural funds should go to the richer member states. Here we agree with the UK Government that in addition to the two applicant countries, Romania and Bulgaria, structural funds should be concentrated on the 10 new member states which are overwhelmingly poorer than the existing states.
	Structural funds have proved in the past to be a good mechanism for bringing up the living standards and the growth potential of the poorer countries towards the average. We need to ensure that that is the way in which they are used in future. Indeed, using the same logic, which argues for shifting much of the burden of financing the CAP towards member states, we believe that the national governments of the wealthier states should be prepared to fund their own regional policies. If they think it is necessary, they should do it themselves—they do not need EU funds to do it for them.
	Making a general point, we say that, looking to the future, it is essential that a better job is made of devising the budget. We propose that a high-level independent panel is charged by the Council with reviewing the budget, especially the monitoring of the added value of spending proposals.
	I now turn to the vexed question—the famous question—of the UK rebate, or what the noble Baroness, Lady Thatcher, used to call "my money". As we have heard from our French and German colleagues, the rebate issue will feature prominently in the discussions and negotiations on the budget. The history of the rebate is clearly set out in Chapter 8 of our report. There are also some very useful tables showing the impact of the abatement on the UK net contribution to the budget. These demonstrate that without the rebate we would be the biggest net contributor.
	It is also clear that almost all Britain's excessive budget contribution is attributable to our low share of receipts, especially of agricultural spending—which, incidentally, one of our witnesses called the French rebate. If the CAP were to be reformed or its financing shifted from the European to the national level, then both the unadjusted British net budget contribution and the rebate would fall very sharply.
	We conclude that the British insistence that the rebate is non-negotiable is legitimate in the context of an unreformed CAP. However, if real reform were on the table—if more reform were on the table—then the Government should be prepared to negotiate. I do not think that the Government accept that point and I quite understand, for bargaining reasons, why not. They do not want to reveal their hand too soon. But if the other countries, particularly France, are not prepared to look further at reform of the CAP, then we are entitled to hold on to our rebate.
	In conclusion, despite the severe kick in the pants administered by the French and Dutch voters, I remain convinced that the EU is a good bargain for its members, including the United Kingdom. I believe that the single market drives prosperity across the European Union. Its existence underwrites stability and democracy in Europe, and its effectiveness gives the European countries greater clout in the world.
	I also very much agree with the leader in last Sunday's Financial Times, which stated:
	"The No votes in France and the Netherlands were partially the result of political misinformation and ritual abuse of European institutions by governments".
	The cause of many of the EU's present difficulties is persistent dishonesty and misinformation about Europe. I would hope that the careful work of Select Committees, both in this House and in the Commons, can contribute, at least in a small way, to a more honest, better informed, less biased debate about European matters.

Lord Kerr of Kinlochard: My Lords, it is with some trepidation that one makes one's first intervention in your Lordships' House. In my case, a particular degree of trepidation may be appropriate, given what we may be about to hear in the Statement—the fate of a piece of homework on which I spent some time working for three distinguished Members of this House and 200 other elected politicians, in the EU convention that produced the first draft of the constitutional treaty. That is not the subject of our debate today, but, like the noble Lord, Lord Radice, I may be drawn into referring to it. I shall of course say nothing remotely controversial.
	The motto of the clan Kerr is sero sed serio, which, if any of your Lordships' Latin were rusty, I should have had to translate as "Late, but in earnest". It is said that the motto was acquired from the clan's habit of being rather late for the battle, but in earnest about the division of the spoils. That is appropriate to my role on the committee chaired by the noble Lord, Lord Radice, as I joined it when it had already done all the serious work and taken all the serious evidence, including from one very distinguished Member of this House, and was reaching its conclusions. I therefore can say that I agree with its conclusions, and believe it to be an admirable report. I agree with what has just been said about it.
	I shall add only three points: on perspective, on balance, and on equity. On perspective, I started work on European Union financial matters about 20 years ago. At the time, the large majority of member states believed, among other things, that the European Union should grow via a growing budget. Only a very small number of member states took a different view. It may not be wholly coincidental that only a very small number of member states were net contributors to the budget; indeed, 20 or even 15 years ago, there were only two net contributors—the United Kingdom and the Germans. Today there are eight or nine net contributors and, as the report which was so well presented by the noble Lord, Lord Radice, brings out, the debate is now about whether the resources of the European Union should be just over or just under 1 per cent of the gross national income of the European Union. The Commission's opening bid was 1.14 per cent; the large net contributors prefer not to go above 1.00 per cent.
	There is plenty of room for real and sharp debate, but the perspective is that we are no longer talking about building a supranational entity via a budget. We are, incidentally, no longer talking about creating a taxing power for the European Union. Twenty years ago, a majority of member states believed that the European Union should be given the right to levy taxes. It is the case now that no member state wishes to concede it that right, although the Commission still asks for it.
	The idea of a superstate, which lay behind some fears about the constitutional treaty, needs to be seen against the perspective of an entity which is allowed, by levies from the member states, a maximum of about 1 per cent of GNP to work with, and is allowed no taxing power. Those arrangements have to be changed only by unanimity. All those three elements would have remained the case had the constitutional treaty been ratified.
	My second point is about balance. The noble Lord, Lord Radice, has drawn attention to the absurdity, as it seemed to him and his committee, that about 50 per cent of the budget of the European Union should be spent on the common agricultural policy, when agriculture represents only about 4 per cent of gross national income in Europe. It may be no coincidence that about 50 per cent of the budget of the European Union is not subject to the full rigour of scrutiny in the European Parliament. That 50 per cent—dépenses obligatoires—includes the agriculture budget. I am not saying anything remotely controversial, but one passing advantage of the constitutional treaty would have been to extend the Parliament's full scrutiny across the full range of the budget. I refer of course to the distribution of the budget, not to the size of the budget—the size would have remained a matter for the member states, but the distribution would have been subjected to the full scrutiny of the European Parliament.
	I believe that over time the interests of the urban majority would have played on that extraordinary imbalance, with 50 per cent for agriculture. However, that is not to be. It may be that the point that I have just made was a component in the French "No" vote. It is certainly the case that France is by far the biggest single recipient of funds from the common agricultural policy, with almost twice as much as comes to the United Kingdom.
	I believe that aménagement de territoire—looking after and caring for the countryside—is an entirely laudable aim. The beauty of the French countryside is a wonderful thing, but it should be paid for by the French taxpayer, not by the British taxpayer, let alone the east European taxpayer. That does not make sense and over time it will have to change.
	Here I come to my point about equity. Will it change now? Will France concede changes to the common agricultural policy which could be called real reform? I think that the chances verge on zero. They probably were zero before the referendum; they certainly are zero after the referendum. The committee chaired by the noble Lord, Lord Radice, concluded that so long as the CAP's predominant weight in the budget remains, the UK abatement is justified. That seems to me to be plainly and clearly the case. Even after abatement we remain the second largest contributor to the Union budget.
	Of course, there will be bluster about how we need to change our position—there always is. Of course, we shall be isolated on this issue. It stands to reason that we are isolated. We were isolated in 1984 when we secured the abatement. We were isolated in 1988, and in 1992, and in 1999 when we secured its renewal. We shall be isolated again, and it will be renewed again.
	I wish to say two more words about the constitutional treaty. A no is a no. An American might add that two noes are a real "no no". I do not for a moment dispute that there is no point whatever in proceeding with a ratification process in this country. Indeed, I cannot understand the motive underlying pressure from Paris, Brussels and Luxembourg for a macabre ritual dance of ratification and referenda to proceed. I see no point in it. If the French were to make a case, they would have to explain whether—this seems to me to be implausible—it was the intention of the Elysée that the question should be put again to the French voter on the basis of the same treaty. That is conceivable, but it seems to me to be wildly implausible. Or—this is the only other possible explanation—the French plan is to propose changes to the treaty, or some additional measures, which will in some way qualify or adjust the treaty. In which case it is absurd to ask the Polish, British, Danish or Irish voter to answer a question that has become entirely hypothetical, because the package on offer would in that situation not be the one which is on offer today. It follows that there is no point in continuing the dance.
	On the other hand it seems to me that there is a lot of point in trying to learn a lesson or two from what has occurred. One obvious lesson from the French and the Dutch campaigns and their result, and from the campaign in this country to the extent that we have had one, is that the EU, which was created for motives of reconciliation and reassurance—very worthy motives—has paradoxically come to seem threatening. Its institutions have come to seem extremely remote and obscure. A further paradox is that the treaty, which was rejected partly for those reasons, would have done something to remedy those defects. Therefore, the question is, could any of the reforms which happen to be in the treaty be implemented without the treaty?
	Some plainly cannot be. For me, the most important reform for the long-term health of the EU is that it should have a voting system which is democratic in the sense that there is a clear correlation between population of country and voting weight in Council. That is not the case with the present situation—the situation to which we are driven back, and have to operate with the present tangle of treaties, including the Nice Treaty with its absurd and incomprehensible voting system, which has such a low correlation between population and votes.
	It is, of course, the case that had the constitutional treaty been ratified, British voting weight in the Council would have increased from about 9 per cent to about 13 per cent. However, the reform was an acceptable outcome because everyone could see that it was more democratic to have some closer correlation. One day we shall have to have it, but to introduce it now would mean amending the treaties. Clearly, we are not amending the treaties so we cannot have it now.
	However, there are one or two things that we could conceivably have now. I shall give just two examples. If the constitutional treaty had been ratified, the Council would have been required to legislate in public. There is no treaty so there is no such requirement. However, the existing treaties do not require secrecy. To some, like me, it seems in principle odd to legislate in secrecy. The act of legislation should in my view be done in front of the citizen. The Council could decide of its own volition and its own accord to open its doors, to let the cameras in and to legislate in public. I hope that it will do so.
	I give a second example. If the constitutional treaty had been ratified and had come into force, the Commission would have been required to give national parliaments a first look at draft legislation and the Council would have been required not to look at it until national parliaments had had a chance to do so. With no treaty there is no such requirement. But why not? The Commission could decide of its own volition to operate the procedure that was laid down in the treaty. The Council could decide of its own volition to give the Commission the time to do so. I hope that it will.
	Some may say that this is wicked "cherry picking" of the treaty, underhand and unacceptable. However, would they really argue that it is best that the European Union go on seeming remote and obscure, and that attempts to make it more transparent and to build a closer link to national parliaments are bad just because they happen to have encapsulated in the draft treaty which clearly we are not going to ratify? Perhaps they would, but in that case let them say so openly, because their motive could only be that they wished the European Union to remain unpopular. I repeat that I am determined to say nothing remotely uncontroversial.
	The quality of the report on EU future financing, which the committee chaired by the noble Lord, Lord Radice, produced, and the quality of the speakers who will follow me, show how serious and substantive a contribution this House could make to EU legislation were it to be given a greater opportunity to do so. I thank your Lordships for your patience regarding my contribution; and I warmly commend the report to the House.

Lord Barnett: My Lords, I consider it a privilege to pay tribute to such an excellent maiden speech. I would have liked that maiden speech even if I had not agreed with almost everything in it, which I did. Not all maiden speakers manage to relate their maiden speeches to the relevant debate—this debate concerns the European Union budget—but in this case the noble Lord certainly did so. That is no surprise, of course.
	In a moment I shall refer to some of the points that the noble Lord made on the constitution, with which I gather he had a little to do. As we all know, the noble Lord was a very distinguished diplomat. He was head of the Foreign and Commonwealth Office. Indeed, he also served in the Treasury as Principal Private Secretary to one or two Chancellors, two of whom are present. Even if he had not had that unfortunate job to do, his service in the Treasury indicates what a brilliant mind he has. That service occurred after I left the Treasury.
	The noble Lord, Lord Kerr, has had a tremendous career in the Diplomatic Service. That career is very well known. I hope that his career in the Lords will prove to be an excellent one, as, indeed, is indicated by his maiden speech. It will be a great pleasure for all of us to hear him speak on many occasions. I hope that noble Lords will recognise that what the noble Lord has said today is an excellent foretaste of the speeches we can expect to hear from him. He adds a great deal to this House and to the contribution that we will be able to make as the House of Lords in the future. I am delighted to offer my personal congratulations again on such an excellent maiden speech.
	I thank my noble friend Lord Radice and his committee for this excellent report. It sets out the facts clearly, and anyone who reads it will find it as excellent a report as I did. The trouble is that the report is obsolete already. I regret to say it, but the French and Dutch referendums have changed the landscape both in relation to the European Union constitution proposal and to the budget that we are debating today. Obviously, the budget is at the very heart of the European Union and the way in which it should be run. Those referendums, however we interpret them, show very clearly that the people of Holland and France do not like the way in which the European Union is run. It would be foolish of us not to recognise that straight fact. Whatever my right honourable friend the Foreign Secretary is saying at present, and whatever my noble friend Lord Radice said about the treaty being put in cold storage—as has been said by the noble Lord, Lord Kerr, and others—it is more than just cold storage. To talk about resuscitating it and saying we should all have referendums is absurd and a nonsense. The sooner we recognise that, the better.
	However one analyses the reasons for the "No" votes—and many analyses have already been given in various newspapers and commentaries—the fact is that the treaty was most certainly never read by the great mass of the Dutch and French populations, as it has not been read here in the UK and would not be whether we had a referendum or not—510 pages is quite a lot for the average person to read. I doubt very much that they would do so.
	Equally, I regret that my noble friend Lord Radice in his excellent opening remarks suggested that our Select Committee reports in your Lordships' House—and this is a good example of the excellent kind of reports that the House of Lords produces—will not be read by many in the United Kingdom, let alone France, Holland or Germany for that matter. It is a shame, because they should read it; there are a lot of excellent facts in the report.
	If we had a referendum on the European Union budget in almost any country there would almost certainly be a "No" vote. As I said, it is right at the heart of the way that the European Union is run. The electorate will not have read the fact in this well-documented report—my noble friend Lord Radice has already referred to it—that over recent years the budget has declined as a percentage of GNI. That will not stop everyone assuming, and newspapers commenting, that it has gone up regularly every year. As this report brings out, the plain fact is that European Union member states have increased their budgets far more than the European Union budget itself. We see in paragraph 12, page 13, that national budgets,
	"on average across Europe have increased by 22.9 per cent; and over the same period the United Kingdom budget has increased by 67.5 per cent".
	The budget of the European Union actually fell. I doubt if that would be heard by many people in the country or be expressed in any newspapers, whether in leaders or comments, but it is a fact.
	So what does a believer in democracy who also, like me, has been very much pro-European Union, do in these circumstances? First, as a parliamentary representative, whether elected or not, we must represent the facts as we see them. As we have seen from the two referendums and almost certainly would see from a referendum in the UK and in many other countries across Europe, people do not like what has been going on. So what do we do about the budget now? I start with paragraph 137 on page 47. It is a statement of the obvious:
	"We do not believe that these negotiations should be rushed".
	They certainly should not be rushed, and I am sure that they will not be rushed. The chance of agreement on anything at the present time—whether the budget or anything else—is pretty slim.
	That being said, the negotiators on the budget, let alone the public, will not care a jot about the facts of this report or of the excellent Sapir report, to which my noble friend Lord Radice referred both today and in the report. As has been made clear, France and many others will insist on the abolition of the UK rebate right at the start of any discussions. They will go on about it not only then but throughout any discussions. The only compromise for the UK would be—as the report brings out and as my noble friend said—if the common agricultural policy were not just reformed, as recently, but scrapped. If it were scrapped, that would do two things. First, it would substantially reduce the size of the budget. Secondly, it would make it much fairer to the UK; not only to the UK but to many others in the European Union. President Chirac, and Schroeder, and anyone else who presses the UK's Chancellor and Prime Minister to abolish the rebate should be told in clear terms, "Yes, we will agree to consider the rebate, provided you consider the abolition of the common agricultural policy".
	I noted what was said by Martin Wolf, a highly respected journalist on the Financial Times, who was a witness. He said that if you get rid of agricultural spending, there is no case for a rebate. I am sure that most sensible people—I am excluding no one at the moment—even possibly a few round the Finance Committee table that I have attended over the years would recognise the reality of that. The fact is that it would delay any potential deal. That is the only compromise that the UK should accept; no other compromise is possible.
	As the Committee brings out in this report, the present budget has its priorities all wrong. The lack of economic growth throughout the European Union was obviously a factor in those "No" votes. High unemployment, low economic growth, and dislike of the leadership in both countries were factors, but the lack of economic growth was at the heart of it. We should perhaps send copies of the report to the next Finance Committee meeting in Brussels; it might be helpful to them to have it in front of them. Paragraph 13 clearly brings out that if they change their priorities there will be a better chance of economic growth in the European Union, where growth has sadly not been too good in recent years.
	However, recognising that the referendum is a start, we will have to accept that the European Union—if we are listening to those views in Europe—will have to be on a smaller scale, at least to begin with. I hope that we will still achieve integration and I hope that some of the aims stated in the excellent maiden speech by the noble Lord, Lord Kerr, will be achieved. Certainly, it would be helpful if there were more openness in the meetings that reach the decisions that are crucial to all of us.
	Initially, we shall have to do less. I regret that, but those are the facts as we see them. The public may eventually regret that we are unable to make further progress.

Lord Triesman: My Lords, with the leave of the House, I shall now repeat a Statement made by the Foreign Secretary in another place. The Statement is as follows:
	"With permission, Mr Speaker, I should like to make a Statement on the EU constitutional treaty, following the "No" votes in the referenda in France and the Netherlands last week. I shall be explaining why we have decided to postpone the Second Reading of the European Union Bill.
	"At the end of 2001, European leaders met at Laeken in Belgium to consider the future of the EU. Just three months before, the world's sense of order had been shattered by the atrocity of 11 September.
	"Reviewing the progress made within the EU over previous decades, European leaders said that the Union,
	"stands at a crossroads, facing twin challenges, one within and the other beyond its borders . . . Within the Union, European institutions must be brought closer to its citizens; beyond its borders, the Union is confronted with a fast changing, globalised world".
	"It was this Laeken declaration which led to the Convention on the Future of Europe and to the intergovernmental conference which followed it. Negotiations in the IGC were hard fought, but the United Kingdom achieved all its key objectives. My right honourable friend the Prime Minister and I therefore had no hesitation in recommending the new treaty to Parliament and to the country. We did so, not least, because the EU's organisation plainly needed reform better to cope with the new challenges set out at Laeken and with the enlargement to 25 member states.
	"So, the treaty includes: a reduction in the size of the European Commission; a much better voting system which benefits the United Kingdom; an end to the six month rotating presidency, with replacement by a full time president of the council and team presidencies; better arrangements for involving national Parliaments in EU legislation; and greater flexibility through "enhanced cooperation", to allow groups of member states to cooperate more intensively while others go at their own pace. And we kept our national veto in all key areas of concern.
	"The Prime Minister and I signed the constitutional treaty in Rome on 29 October last. But like any other EU treaty it requires ratification by every one of the EU's member states—now 25—before it can come into force. As of a week ago, nine countries had approved the treaty through their parliamentary processes and one, Spain, by referendum. In the last week, however, as the House and the country are very well aware, in referenda the electors in France voted "No" by 55 per cent to 45 per cent and in the Netherlands by 62 per cent to 38 per cent.
	"The constitutional treaty is the property of the European Union as a whole. It is now for European leaders to reach conclusions on how to deal with the situation.
	"To give effect to the UK's commitment to ratify the treaty by referendum, we introduced the European Union Bill in the last Parliament and it was given a Second Reading by this House by a majority of 215 on 9 February. The Bill fell on the calling of the general election. It was reintroduced in this new Parliament on 24 May—before either the French or Dutch referenda—and it would, in normal circumstances, have been scheduled for its Second Reading very shortly.
	"However, until the consequences of France and the Netherlands being unable to ratify the treaty are clarified, it would not, in our judgment, now be sensible to set a date for Second Reading. There is also the need for further discussions with EU partners and further decisions from EU governments. The first opportunity for collective discussion within the EU will take place at the end of next week when the heads of state and government meet in the European Council.
	"We shall of course keep the situation under review and ensure that the House is kept fully informed. I should emphasise that it is not for the UK alone to decide the future of the treaty and it remains our view that it represents a sensible new set of rules for the enlarged European Union. We reserve completely the right to bring back the Bill providing for a UK referendum should circumstances change. But we see no point in proceeding at this moment.
	"As I commented during last week, these referendum results raise profound questions about the future direction of Europe. The EU has to come to terms with the forces of globalisation in a way which maximises prosperity, employment and social welfare. There are other larger questions: how we can strengthen the force for good of the EU in foreign policy, along with aid to poorer countries and trade? How can we ensure value for money for our citizens and better regulation? How can we make a reality of the widely agreed concept of subsidiarity, ensuring that decisions are made at the lowest level possible?
	"All these issues have long been central to the United Kingdom's priorities for the European Union and will be so for our EU presidency which begins on 1 July. The continuing issues of enlargement and future financing will also be on our agenda. At the start of the presidency, I will publish the latest in our series of White Papers on the EU and make an accompanying Statement to set out our priorities in more detail.
	"Let me conclude by saying this. The European Union remains a unique and valuable achievement, central to the United Kingdom's prosperity and well-being. The world's largest single market has enabled the businesses and people of this country to earn new prosperity by trading freely across borders. European co-operation has broken down barriers to travel, work and leisure. And the EU remains a vital engine of peace, democracy and reform.
	"The EU does now face a period of difficulty. In working in our interests and the Union's interests, we must not act in a way which undermines the EU's strengths and the achievements of five decades".
	My Lords, that concludes the Statement.

The Lord Bishop of Chelmsford: My Lords, perhaps we on these Benches may also be associated with the remarks about Emily Blatch. The whole House not only had huge respect for her skill in the contributions she made to this House but I am sure also carried a great deal of affection for her as a human being. Our thoughts and prayers are with her family and friends today.
	Will the Minister accept that there is at least one piece of good news in all of this? That is, the people of Europe want a say. Will he note that a higher percentage of people turned out for the referendums in France and Holland than bothered to vote in the general election in this country? I am told that up to 10 per cent of the people of France had read the whole of the constitution. Given that we all accept that having a referendum may not be the most sensible thing to do in the present context, how do the Government propose to help the people of this country to get their minds around the choices and issues that face us in Europe today? Will he accept that, at a moment of difficulty and even division, reaffirming the common values and vision that hold us together and which have bought us together in European life is very important from those who exercise leadership in our country?

Lord Stoddart of Swindon: My Lords, it seems, having listened to the debate so far, that we want to change the rules mid-stream.
	What this Statement should have said was that the constitutional treaty requires ratification by every one of the member states, now 25, before it can come into force. In the last week, however, as the House and country are well aware, in referenda the electors in France voted "No" by 55 per cent to 45 per cent and in the Netherlands by 62 per cent to 38 per cent. The treaty is therefore dead. It is dead. The European Union Bill will be withdrawn and will not be reintroduced. That is what the Statement should have said under the existing rules and the law of the European Union. Since it has not said that, could I ask the Government whether they will now seek the opinion of the British people by immediately introducing a simple Bill to have a referendum, certainly by October, so that the views of the British people can be tested and they can give their opinion, which will help the Government in their further negotiations.

Lord Lea of Crondall: My Lords, the contributions so far have demonstrated how extraordinarily timely the report is. I congratulate my noble friend Lord Radice and his committee on it. I echo the noble Lord, Lord Barnett, in welcoming the maiden speech of the noble Lord, Lord Kerr. We look forward to hearing his contributions in the House.
	On the referendum, I wish to quote a statistic that adds a certain twist. The analysis of who voted which way in France and the Netherlands shows that 80 per cent of blue-collar workers voted "No" and generally the professional classes voted "Yes". I regret that, and it gives us pause for thought, but I gently suggest that it may be something to do with worries about job insecurity and so on. The idea that the answer to the question, "What do we want?", would be, "We want to join the Bruges group", is perhaps a misinterpretation. I hope that our own Government take that message to heart.
	Now that we are where we are, it should be asked whether it was a very bright idea to have an exercise comprising the word "constitution" in the first place. I said privately throughout, and I say in public now, that I do not think it was a very bright idea. To have such a shibboleth about the United States of Europe—Philadelphia 1776 to 1787 and all the rest—rings all the wrong bells, not only in Britain, given our history of common law and so on, but everywhere. It is like asking people to approve of the modern world. When asked whether they like the modern world, most people will think that it could be improved and will therefore say no.
	It is very natural to say, "I do not like that bit and that bit". As the noble Lord, Lord Kerr, said, it was a package deal. But people are normally asked to vote for a package deal of legislation, in legislatures, through parliamentary democracy. So, it was not a bright idea to have an exercise with the word "constitution" in it, and it was certainly not a good idea to go down the road of having a referendum. One can always paraphrase Churchill to some effect: the substance of the treaty may not be perfect, but it may be better than the alternatives.
	The report stands for itself. I do not think that, when things have settled down, the problems in Europe will be as cataclysmic as has been suggested in some quarters. The noble Lord, Lord Howell of Guildford, will have his chance later, but I do not think that it was wise of him to introduce the question of whether the euro was now shaky. I would put my money on the idea that the euro will be here for our lifetime. More countries will join the euro, and the Chinese have put more reserves into the euro. This is not the time to say that the euro is shaky.
	The idea of keeping the budget in isolation from the purposes of the European Union is wrong. To those who have emphasised the wider purposes of the European Union, I offer one example: climate change. There is not much difference between a European energy tax and a commitment from each country to do certain things to reduce carbon dioxide emissions over time. Call it what you like, it is a fiscal understanding to change relative prices. That is the same job as taxation will do. One might also mention the role of value added tax.
	I turn to the two main elements in the excellent report: the size of the European budget and the UK's contribution. I add one feature that connects the two: the role of structural funds—the European Social Fund and so on. I am not quite in line with the report on scrapping the structural funds as far as the whole of western Europe is concerned. The Treasury may have dug its heels in a bit too far on both subjects.
	First, there is the size of the European budget. The Treasury often overplays its hand and has done so on this occasion. I have two reasons for saying that. If you look at the table on page 11, which shows the current financial perspective, you will see a 50 per cent rise in development aid. The noble Lord, Lord Hannay of Chiswick, asked Douglas Alexander, who was trade Minister at the time, what he would cut if he wanted to increase that figure further. He did not get a very satisfactory answer.
	Last week, we saw the Ministers agreeing to double aid to Africa under the European umbrella—certainly, it was European Ministers making the agreement—from £20 billion to £40 billion. In a normal budgetary procedure within a country, you know how expenditure will relate to income as you are doing the exercise. It is much more difficult to do that here. In the "Europe des patries" that everyone advocates, people will always vote for the things that they want, without considering the amount of money available.
	It was significant that, this weekend, the Financial Times ran a report that Chancellor Schröder was moving a bit towards the position of the Luxembourg presidency, which has come up with a scheme based on a figure of—I speak from memory—1.06 per cent. I echo the timely observation by my noble friend Lord Barnett that the European budget has grown extremely slowly in comparison with all the national budgets in the EU, in particular the budget in this country, under both governments. We must avoid too much rigidity in our negotiating position on the overall size of the budget. Somewhere between 1 per cent and 1.06 per cent—to split the difference again—is where things should work out.
	In its response to the report, which we got only in the past few days, the Treasury is guilty of cherry picking. It is highly commendatory of things that are in line with government policy, without recognising that the report is itself a package deal. The Treasury is very good at saying that some things are there on their merits and are not part of a negotiation.
	We must reflect a little on the nature of European negotiation. European negotiation is nothing like running a nation state. It brings out all the worst features of the rivalry between countries. I sometimes wonder whether we are not shaping up, over the next 10 years, to rerun the battle of Agincourt. I have done some research on it—I was never good at history at school—and I notice that, in 10 years' time, we will have the 600th anniversary of that battle. I would bet your Lordships a lot of money that it will be a great celebration in this country. I must also point out that the history books tell us that, in 1453, at the end of the Hundred Years War, we were totally cleared out of France. You do not need to be the French ambassador to draw attention to that endgame.
	Before we discuss how to deal with the balance between the common agricultural policy and the rebate, I shall say a word about the structural funds, the European Social Fund and so on. It is remarkable that, as is mentioned on page 28, for 92 per cent of the population of the new member states, the relevant GDP figure per head is below 75 per cent of the EU average. It is rather confusing to have, on the same page, a table showing purchasing power parity. Those who know a little about how to work out GDP—exchange rates versus purchasing power parity—know that you cannot mix the pudding in the way that, I am afraid, the report has tended to do.
	There was an extraordinarily interesting piece of evidence from the combined Cornwall local authorities and universities. It is on pages 35 to 41. The question posed by the committee about the structural funds was, "Why do something through Brussels, when you can do it here?". I shall make a couple of points about that. There may be some benchmarking value in learning best value from other parts of Europe. There have been some innovations, and Cornwall is benefiting. Combined Universities in Cornwall and some of the policies for getting people back to work have a six-year—it may be nine-year—guarantee of funds. They can do things under the structural funds and the European Social Fund that we have not been able to do in this country. Before we take the position that the only question is equity and ask, "Why should the rich countries of western Europe be in receipt of structural funds?", we should take that point into consideration.
	There is a certain naivety among those who preach from a distance about how people ought to forget about the juste retour and all the rest of it. A degree of political ownership of the European enterprise, such as I have mentioned in Cornwall, is not a consideration to be sneezed at. We should not throw out that baby with the bath water.
	As regards the budget rebate, it is worth reminding ourselves that the problem arose because we did not join the EU/EEC at the start. In 1969, Customs duties and import agricultural levies were made the heart of the income side of the equation. When we joined in 1973 we were stuck with it; hence, Harold Wilson, renegotiation, the referendum, and all the rest of it. But it would not have been sorted in that way if we had been present at the start, and that moral should always be borne in mind.
	We have therefore got to look at the balance between further changes in agricultural arrangements and whether the rebate should be on the table. Interestingly, the same article that mentioned Chancellor Schröder said that the Luxembourg presidency had talked about a cash freeze on the rebate. That may be worth thinking about for the sake of taking the debate further forward. In other words, we would not lose any of our rebate, which I know will not be popular, but people have got to look at where there might be some room for manoeuvre.
	In our agricultural arrangements, it is true that we do not get too much back. However, we should bear in mind that when we put forward a package deal but the French Government cherry-pick the report from my noble friend Lord Radice and say, "Ha, there are important voices in Britain ready to look at the rebate"—which is true—it would occur only as a trade-off with a very considerable reduction in the amount of agricultural spending.
	Apropos the Battle of Agincourt, the entente cordiale centenary celebrations were only a couple of months ago. We must have a new and more civilised relationship with France. We cannot say that national parliaments should have a major role in discussing European questions without opening up the question in a "Europe des patries". Why we do not have a joint parliamentary committee with the French Parliament to look at some of the questions between us? We ought to have such a joint committee and recognise that parliaments have a role that is separate from governments. It may be easier for parliaments to get to grips with some of the issues without the amour propre between Tony Blair and President Chirac which has clearly got in the way of a more sensible relationship between Britain and France.

Lord Willoughby de Broke: My Lords, I rise with some trepidation as a Euro-realist thorn among this bouquet of Europhile roses to put a slightly different view on the report. When I bumped into the noble Lord, Lord Barnett, before the debate I promised him that my speech would be almost entirely gloat free, which it will be.
	I agree with a lot of what has been said in this excellent report. I congratulate the noble Lord, Lord Radice, and his committee on the report, which comes to some very sensible conclusions. I nearly said "surprisingly sensible" conclusions: I could have written some of them myself.
	Jumping straight to those conclusions, first, after a merciless slash-and-burn attack on the CAP, the report asks at paragraph 58,
	"why must support for farmers in Europe be largely or wholly financed at the European Union level?".
	It concludes that a move towards national financing of CAP subsidies would,
	"do much to eliminate budgetary imbalances between Member States".
	That is history in the making. I remember saying that for years during our debates on the CAP, only to be told by successive Ministers from both parties—I see the noble Lord, Lord Whitty, sitting on the Back Benches—to go and lie down in a dark room until I felt better. Now, the very idea that we should repatriate the common agricultural policy seems to be accepted by the committee, and I am delighted.
	But it gets even better. The report is rightly dismissive of the structural and cohesion funds; that is, the bribes paid by rich countries to poorer countries to persuade them that the EU is "a good thing". About those slush funds, the report states:
	"There is a strong belief among those involved in these projects that they add value"—
	the report goes on to observe with an exquisitely straight face—
	"but evidence to justify this belief is not conclusive".
	In committee speak, that means that it is total hogwash.
	The report gives the final quietus to the slush funds in paragraph 150 of its conclusions, which states:
	"Using the same logic which argues for shifting the burden of financing the Common Agricultural Policy back towards the Member States, we believe there is a strong case . . . for . . . governments to fund and manage their own regional policy".
	Who am I to argue with that? It is a brilliant conclusion.
	Having slaughtered two of the EU's fattest sacred cows—the CAP and the structural funds—the committee turns its humane killer on the Lisbon agenda, which was, as far as I can remember, supposed to make the EU the most competitive economy in the world by a certain date. It does not matter by when because it is just a wish list. It is rather like a child's letter to Father Christmas, which says, "I want a competitive economy, a fire engine, an IT policy and a doll's house". It is as ludicrous as that.
	The report concludes correctly that,
	"The Lisbon Agenda is mainly a Member State initiative . . . Most policies that are needed to achieve Lisbon—
	this is important—
	"do not require public expenditure at EU level or indeed public spending at all".
	End of story.
	So, with three sacred cows efficiently dispatched, what is left in the report? The answer is: not very much. There is a bit of R&D, a bit of infrastructure and a nod towards EU propaganda—sorry, I meant to say education policy—and that is about it.
	Serendipity has it that we are debating this report only a week after the people of France and Holland have blown a comprehensive raspberry at the whole idea of the EU. The referendum shockwaves mean that the EU can never again be quite the same. The days of increasing centralised power in the hands of unelected Eurocrats are gone. We can safely ignore the posturings of Mr Mandelson and his fellow commissioners that it must be "business as usual", which they are saying at the moment.
	Of course, the Commission and the rest of the EU "apparat" are in favour of business as usual. That is where their salaries come from, where they get their expenses and where their houses come from. That is where all of the little perks that they enjoy so much come from: travel, budgetary costs, limos and chauffeurs, not to mention their huge inflation-proofed pensions. They would be mad not to defend all of that, as most of them would be unemployable in any other job at remotely the same sort of salary.
	All of that was swept away in those two memorable days. Now is the moment for Britain to stand back and look to its national interest. What is the EU for? Should we be part of it? We have to ask those questions. The whole grandiose project is now in question, and not before time. The British people were never asked—in spite of what was said by some Europhiles in questions on the Statement—if they wanted the project. It has been stuffed down their throats by successive governments.
	The last time that we had a vote on Europe in this country was 30 years ago. I want to underline that to the Liberal Democrat Benches in particular, because they seem to have a mental block about it, that it was a vote on whether we should remain in what was then the Common Market—no more. The British people have never agreed—they have never been asked—to hand over power to what the noble Lord, Lord Rees-Mogg in his article in today's Times calls "the bureaucratic prison-camp" of Brussels by ever-increasing use of QMV. We have never voted for EU citizenship because we were never asked. We have never voted for a common foreign defence policy, for an EU army, for the Social Chapter or for having 70 per cent of our laws made in Brussels to be interpreted and enforced by the European Court of Justice. We were not asked if we wanted a common fisheries policy or the European Parliament. We were not asked if we wanted the European arrest warrant or a European public prosecutor.
	Now is surely the time to take stock. The internal tensions in the EU are becoming irreconcilable. The European social model, about which we have heard a little today, is self-evidently a failure. It has produced only mass unemployment, high taxes and low growth. In spite of what the noble Lord, Lord Lea, said, the euro is in big trouble. One has only to look at the financial markets to see that. Germany now admits that the whole thing was a ghastly mistake, but remember that the Germans were not even asked if they wanted to abandon the deutschmark.
	Last Thursday, the German magazine Stern reported that German finance Ministers were briefed by Morgan Stanley's chief eurozone economist that,
	"the risk of a euro wreckage has risen significantly".
	I assume that that is a translation. Moreover, an Italian government Minister, for welfare I think, has been directly reported as suggesting that the lira be reintroduced as soon as possible.
	We are paying £12 billion a year into the European Union coffers; £12 billion a year to be members of this failing club. That represents £35 million every single day of the year, including bank holidays. Indeed, by the end of this debate we will have paid in £2 or £3 million more. Could someone tell me why? We have never been given an answer to why all this expenditure is so valuable. I think that the noble Lord, Lord Radice, said in his opening remarks that it represents value for money, but he did not tell us why it does so. The Statement, on which we were able to ask a few questions, said that our membership of the European Union is "central to the UK's prosperity". While that can be said, it does not tell us why it is central to our prosperity, because of course it is not. The Government myth that we would lose millions of jobs and masses of exports were we to stop signing the cheques has been exploded in a number of studies, most recently by Professor Patrick Minford, who I believe gave evidence to the committee. His most recently published book, a copy of which I have ensured is in the Library and which I strongly recommend to all members of the committee, is entitled Should Britain Leave the EU? An Economic Analysis of a Troubled Relationship. These studies show that far from being in our interests to remain in the EU, it is a fact that we cannot possibly afford to remain in it. Indeed, it goes against our financial interests to do so.
	I suggest, therefore, that this House should request either the EU Select Committee or a special sub-committee to examine dispassionately the merits and demerits of our continuing membership of the European Union. All the evidence is there; it is in the public domain now. I can think of nothing more important to our freedom and independence than to hold this debate, and to hold it now.

Lord Whitty: My Lords, I along with everyone else am grateful, as always, to the noble Lord, Lord Willoughby de Broke, for sharpening up the debate and providing balance. But those of us who perhaps feel a little humble these days from a pro-European point of view, in the light of recent events, nevertheless have been helpfully reminded of the opposite point of view held in this House and elsewhere, and how dangerous it would be for this House, the Government and the people of this country to follow the line urged on us by the noble Lord.
	When I first decided to put my name down for this debate as a sort of reintroduction to the Back Benches—it is my first Back-Bench speech for eight years, made without a Civil Service brief and the comfort of leaning on the Dispatch Box—I thought that it would be a relatively quiet affair. But since the subject was first scheduled, things have changed dramatically. I congratulate the committee, and in particular my noble friend Lord Radice, on the clarity of the report and the Government on their response. I also congratulate the noble Lord, Lord Kerr, on his maiden speech and contribution to the debate.
	Some clear issues and important dilemmas have been raised. But the earthquake which has taken place in Europe over the past few days means that the situation which the British presidency will now have to deal with is set against a context which is far more important than simply budgetary matters, although we would always have had to deal with decisions on the seven-year financial perspective. As many noble Lords, including the noble Lord, Lord Kerr, my noble friend Lord Barnett, the noble Lord, Lord Inglewood, and to some extent even the noble Lord, Lord Willoughby de Broke, have said, this budget is in a sense the shadow of what Europe is for: who pays for it, who benefits, what usefully can be done at the European level, and what cannot be done. It is time for that debate and it is time for Members of this House to address those issues.
	My original intention was to make a few arcane remarks about the common agricultural policy, about which until recently I was obliged to know rather a lot, and then add to that a few general remarks on matters about which I know rather less. That is the normal course for debates in this House. But I think we now have a more serious issue to address. Nevertheless, I want to make a few correctives in relation to the CAP itself.
	I think that the degree to which the CAP has already been seriously reformed is underestimated. The Government's achievements, in particular those of Mrs Margaret Beckett, have been under-acknowledged in this regard. We have decoupled all support for the production of the main crops in northern Europe. That is a great benefit. We have therefore ended the spectre of expensive over-production. As a result of that, we have by definition automatically eliminated many of the export refunds and subsidies, which is important for the development agenda of the WTO. The support we now give to most of European agriculture is Green Box in WTO terms. That is important as we go into the vital Hong Kong negotiations at the end of the year.
	All this has been achieved by attaching the support we continue to give to agriculture, land management and rural development to environmental outcomes and conditions, which would not otherwise be achieved. We have also managed to enhance the European budget for rural development, perhaps by not as much as we would have liked, but it is still a significant benefit. As a result, people need to recognise that we now have a system of land management support which is closer to saving land from desertification and abandonment, and we have brought an end to the vision of large swathes of Europe being pushed out competitively from producing food and agricultural products.
	There is an argument, made in part in the report and in part during our debate, that that kind of support ought to be given at the national level, and to an extent I share that view. Part of the 2003 deal on the CAP was a degree of repatriation, if I may use a politically incorrect term—or renationalisation, which is probably even more politically incorrect. A lot of the decisions on how the expenditure is made has been brought down to the national and sub-national level. It is interesting to note that many of those who usually object to the centralisation of Brussels now object to the fact that the situation in England is now different from that in France and, indeed, in Scotland. However, that is what subsidiarity is all about. The terms on the payment have already been brought back to the national level and the issue is whether the substance and quantum of that payment should also be brought back to the national level. However, people should not kid themselves. If we do bring significant parts of agricultural policy back to the level of national decision-making, as the committee has effectively suggested, there will be an expenditure on the national budget which would not be unadjacent to the expenditure we currently channel through the CAP.
	Not all of the CAP has been reformed. Big issues remain in relation to sugar and, as always, there were some bodged deals at the end of the negotiations. There is a long way to go in certain respects. However, we are clearly on the road to making agriculture no longer a huge anomaly, but simply an issue of whether the EU pays for it, subject to national rules, or whether nations pay for it and make their own rules.
	The rural development budget, known as Pillar 2 of the CAP, is somewhat different. It has been financed by transfer out of the production-related part of the CAP into rural support. We were strongly in favour of that move. It requires heavy funding, but it addresses the real problems faced by European rural communities and economies; namely, issues of diversification, the agri-environment, the need for training in rural areas and the need for the rural economy as a whole to adjust to changes in agriculture and employment in rural areas.
	Not all of the provisions of the rural development regulations have been supported or drawn on by the UK. Indeed, we have had a less than adequate return in rural development, but it is an important provision. However, again, if that budget should be subsumed and subjected to some degree of subsidiarity at national level, similar kinds of expenditure would be required from the national exchequer in order to meet the needs of rural communities, rural employment and the rural environment. So there would be no free lunch by abolishing the CAP.
	In a sense, this also applies to the remainder of the report. There are a number of perversities, if you like, in the present situation and rather ticklish issues that we would have to face if we adopted the suggestions in the report in their totality. As my noble friend Lord Lea has already said, some of them relate to the rebate and how it operates and some of them relate to the interplay between the implementation of subsidiarity and the rules on state aid. By definition, expenditure at EU level is, to a large extent, exempt from the state aid rules because it is European expenditure. It may be subjected to and influenced by the state aid rules, but it is exempt from them. Once that expenditure at EU level stops and becomes the responsibility of the national exchequer, it will be subject to the constraints on state aid to national industry that apply to industries other than agriculture.
	I accept that the CAP has been too large a part of the budget and that it continues to be so in the Commission's proposals for the next financial prospective. But some of the perverse effects which relate to agriculture also apply more widely. I realise that the rebate is a deeply sensitive and delicate issue, as the committee put it, but one of the effects is that because money for the rebate goes to the Treasury whereas expenditure would go to individual department programmes—and, indeed, savings by any individual department go to the Treasury rather than to the department—there is a tension within national governments, in particular within the UK Government where the Treasury takes a hard line. Hence, if the EU comes up with proposals for spending from the European budget in the UK, the Treasury loses on the rebate—pound for pound, euro for euro—and therefore its instinct is to oppose it. Indeed, the more disproportionately the UK benefits from a proposed expenditure or a shift of expenditure within the EU budget, the more vehemently the Treasury opposes it.
	It is true that wise Chancellors and wise Treasury Ministers—such as those we have at present—have, on occasion, on important issues, overruled the instinctive and natural view of Treasury officials. But as long as the rebate is there, the natural instincts of Treasury officials are entirely rational. However, I would argue that they are not to the benefit of the UK. Hence, if the UK were to take more from the rural development regulation, for example, than we have hitherto, it would be offset against the rebate, and there would be serious hesitation in parts of Whitehall in relation to that. The same applied, to some extent, when we were engaged in substantial expenditure within the UK on structural funds. So there are problems about the way in which the rebate operates in terms of defining our objectives.
	There are also serious political problems at EU level in regard to the rebate. I can remember talking to a wise and senior member of the Dutch Labour Party 10 years ago, just as Holland was about to move to becoming a net payer into the EU budget. He said, "You will find that the unconditional support of the Dutch people for the EU project may begin to wilt a bit at this point". It took a little longer than he said, but last week proved—in part at least—that that was true.
	Equally alarming is the attitude of the eastern European countries which, in most circumstances, are staunch allies of much of the British position in many fields. Their view is that the poorest members of the EU should not continue to pay for one of the richest. So what was justifiable when Britain was the 10th or 11th poorest country within an EU of 15 is much less justifiable when the UK is the fourth or fifth richest country in an EU of 25.
	The answer to this—which the Commission has partly grasped and which the committee rightly rubbish—is a general corrective mechanism. The Commission's own proposition is based on the illogic of the current position and therefore, rightly, the committee has said that this is not acceptable.
	But there are other kinds of corrective mechanism which might be acceptable. If it was based on a GDP per head basis, if there was a limit on the total net contribution of all net payers, and if it was on a tapering basis rather than a pound for pound reduction, it might avoid some of the perversities of the effect of the rebate and receive a reasonable amount of support across other EU countries.
	Unless we get, in the longer term at least, an understanding that Britain is not unique in this respect, and unless the mechanisms that come out of the next financial perspective are acceptable to the totality and are not simply a defensive position of the UK, there will not only be a continued attack on the British rebate but we will not get reform of the common agriculture policy or greater subsidiarity in other areas of expenditure in the EU.
	My noble friend Lord Radice and I have many things in common, one of which is that we were pro-Europeans in the Labour Party when it was fairly unpopular—since before the referendum. Others have changed their opinion—one or two have been obliged to change party over the issue—and parties have changed their opinion, but we have stayed more or less where we are. Last week was a disappointment to us, but it is a disappointment which presents the British presidency with a major opportunity as well as a major challenge.
	Finance is a significant part of that, but it is not the totality. The institutions of Europe have, in part, failed to deliver the expectations put upon them by pro-Europeans and by the European people. But, ultimately, the issue is one of political will, not of the institutions themselves—as the noble Lord, Lord Wallace, said during questions on the Statement earlier—but of the political leadership of Europe at national government level. That will be embodied in the British presidency over the next six months. If the British presidency can find some creative and clear-sighted solutions—not only to the constitutional issue but also to the budgetary issue—which place us on firmer ground for the longer term, it will be a great European achievement for this Labour Government. It is one which many of us were hoping for and expecting in 1997—we have been slightly disappointed in some respects since—but which we still believe is deliverable by this Government over the six months of their presidency.

Lord Howell of Guildford: My Lords, it is a great pleasure to be able to participate in a debate on another absolutely excellent report from the European Union Committee, this time under the wise chairmanship of the noble Lord, Lord Radice, with a very high-powered and experienced committee under his direction. One does not just automatically tick every report from the European Union Committee as excellent. I have known one or two with which I have profoundly disagreed, particularly the one that seemed to misinterpret badly the purpose and future benefits of the now nearly defunct euro constitution. But this one gets the highest praise; it has had it in this debate, and rightly so.
	It is also a very great pleasure to listen to the maiden speech of the noble Lord, Lord Kerr, even though we learned from my noble and learned friend Lord Howe that his speech this afternoon was rather better than some of those that he drafted for my noble and learned friend when he was Foreign Secretary. I am sure that the noble Lord and my noble and learned friend can sort that matter out afterwards. But the noble Lord, Lord Kerr, is enormously experienced, and he rightly expressed the hope that governments—and, indeed, this Government—will learn the right lessons from the past week of drama in Europe. Some of us had the opportunity to comment on that matter earlier, during the debate on the Statement from the Foreign and Commonwealth Secretary that was repeated in this House. I shall not go into the matter now except to express the same hope myself—but along with the fear, as I mentioned earlier, that from the tone of the Statement those lessons have not yet been learned. There is a big step change in understanding what is happening in Europe, and in the whole nature of international relations, which must be grasped before I can have any confidence that lessons are being learned.
	The timing of this debate on the matter of finance is excellent. The issue is of course central, because the new financial perspective decision will shape the budget of the Union. More than just the actual figures, which are in many ways small compared with the vast expenditure of the national governments, as the noble Lord, Lord Kerr, and others pointed out, that decision determines the whole tone and approach of the European institutions to the Europe of which they are proponents and guardians. It is particularly important that we keep an eagle eye on the sums involved and how they are spent—particularly when, as the noble Lord, Lord Pearson, reminded us in his intervention, the Commission has failed to satisfy the Court of Auditors about the European budget expenditure system for the past 10 years. A close eye on those matters is required by national parliaments, and the European Parliament, if the system is to be held efficiently to account.
	As for the rhetoric and the utterances of Ministers, it seems that the opposition party that I represent and the Government are rather close on the rhetoric. All are agreed, and Ministers have made it absolutely clear in the other place, that the initial Commission proposals for the new budget perspective were unacceptable and not a basis for negotiation. This report, with great skill and insight, demonstrates why that is so; it rightly says that the whole approach of the Commission in its first effort is simply too traditional. The Commission is carrying on as though it were for a different kind of Union in a different kind of world from the one that we actually have.
	Not enough emphasis is put on the fact that the Union now has 25 members—and will in due course, we hope quite soon, have 26, 27, 28, or more. In that light, it is the poorer areas of Europe that should receive the most help. If there is a question mark in my voice even as I say that, one has to note in passing that some of the so-called poorer areas in Europe, particularly Poland and some of the Baltic states, as well as the Czech republic and Hungary, are turning out to be the dynamos of Europe. They are the countries that are growing fastest and attracting huge investment, which otherwise would have gone to western Europe. It is a fine irony that, although those newer member countries—the accession states—have big hills to climb and are starting from a low base, they are now the driving force. They give such life as there is—and it is not very much—to the whole European Union.
	That raises a much deeper question, although it is perhaps not to be debated here, whether the whole philosophy behind the "give them the money" approach to structural funds, although I may be parodying it a bit by calling it that, is the right one to promote growth. Does aid equal development? As we know, the answer in the wider world is, "Not always"; in fact, in many cases, the answer is, "Not often". Those who are thinking about seeing a more balanced and rapidly developed Europe emerge, with some of the really serious poverty in the former eastern and central Europe, should perhaps occasionally question whether the methods, tools and instruments for accelerating development in the poorer areas of Europe are the right ones, or whether they, too, need radical revision, as is suggested for many other areas.
	Leaving behind rhetoric, where we all agree that the proposals are unacceptable and not a basis for negotiation, I come to the question of action. How much is actually happening, and after the new proposals, which have come along as a result of revision and complaint from nation states' governments, has very much changed? The answer is not encouraging, as the changes are not big. The common agricultural policy expenditure is still the vast elephant—the dominant lump—in the budget. The export subsidies are still in place, and they are really a terrible stain on the whole approach of Europe to the wider world and on its claim to be a force for liberalisation of trade and expansion of prosperity.
	Nevertheless, to put the other side of the argument, as the noble Lord, Lord Whitty, rightly reminded us, much has been done. The decoupling of support from pure production in a range of crops and activities is a huge advance. It is right that gradually the world is understanding that what we want from European farmers is good husbandry and not more and more subsidised food—certainly not more subsidised food that crushes imports from the developing world. I join with those who accept what the noble Lord, Lord Whitty, said, in a very interesting speech. There has been progress but, by heavens, there is a very long way to go.
	I turn to the Lisbon strategy or agenda, which features in the report—for which it is a ritual business to call for revitalisation from time to time, as Mr Barroso has done. I plead guilty to some scepticism about the whole approach. The noble Lord, Lord Willoughby de Broke, went enjoyably further in saying that it looked like a children's Father Christmas list. But nevertheless for those who would criticise him, the plain fact has to be faced that the Lisbon agenda mark one and, indeed, mark two, have no results to show at all. The cry was that they would generate growth, create the competitive knowledge economy to catch up with the United States and so on, but none of that has happened. The gap has widened. The central parts of the euro-zone part of the European economy are virtually in a coma. There are enormously high unemployment rates in Germany—almost as high as in the 1930s. Unemployment rates are fearsomely high in France as well. These are not the manifestations or outcomes of some successful strategy; they are the outcomes of the Lisbon agenda strategy. I have to advise those countries that I have recently visited which are seeking to join, including Turkey, that the idea that they should model their whole effort on the Lisbon agenda may lead them to back a loser. Let them join the European Union; that is a good thing. Let them share the values of the wider Europe; that is marvellous. However, there is zero evidence that the Lisbon agenda is some magic button or formula that will produce growth in Europe. In fact, such evidence that there is is completely contrary.
	I should like to say a short word on aid which does not feature very much in the report although there is a reference to development aid. The noble Lord, Lord Lea, mentioned it. I have never fully understood the case for the European Union fifth wheel, as it were—the proposition that the European Union should not only co-ordinate aid programmes with the nation states (that is obviously a sensible thing to do) but that it should have its own additional programmes of a very detailed and extensive kind. The question hangs in the air, do these programmes add value? Successive development Secretaries and successive Commissioners have referred to this. I believe that my noble friend Lord Patten of Barnes has said that the EU system of development aid is bad, bad, bad and does not add value.
	Finally, I turn to the super sensitive question—as everyone described it—of the rebate. The report approaches the matter with great delicacy and efficiency.

Lord McKenzie of Luton: My Lords, on behalf of the Government I would like to thank the noble Lord, Lord Radice, and the other members of the European Union Sub-Committee A for their report on the future financing of the European Union. The report is a timely and valuable contribution to what is a most important debate—the future direction of the European Communities budget. As the committee notes, the EU is today at a crossroads and it is critical that the budget can meet the challenges of an EU of 25 or more members and adjust to the Union's new priorities.
	Inevitably, this debate has quite properly become entangled with the issue of the constitutional treaty. The referendums' results raised profound questions about the future direction of Europe. Many of these questions of prosperity, of employment, of globalisation and of aid to poorer countries are intrinsically linked to the future financing of the European Union. A number of noble Lords touched upon that this afternoon, particularly my noble friend Lord Whitty and the noble Lord, Lord Dykes.
	It is therefore only right that the committee's report on the Commission's proposals for the future of the budget is debated here in this Chamber. I should like to thank noble Lords who have contributed to the debate today for their insightful and stimulating contributions, which the Government will consider in the ongoing future financing negotiations. I particularly wish to congratulate the noble Lord, Lord Kerr, on his extremely impressive maiden speech. He had a very distinguished career, which included service in Europe and was at the very heart of matters that are before us today, and which I am sure we shall discuss from time to time in the coming months. I look forward to hearing the noble Lord's future contributions. The timing of his maiden speech was spectacularly good. I hope I may suggest that the family motto should be changed from "late but in earnest" to "timely and in earnest".
	On behalf of the Government I should like to respond to the issues that noble Lords have debated today and which the committee raised in its report. These are: the background to the current negotiations; the common agricultural policy; the structural and cohesion funds; the Lisbon agenda; other spending categories; own resources and an EU tax and the abatement and generalised correction mechanism. The noble Lord, Lord Radice, in his introduction gave a full summary of the excellent report from the committee and I hope that I can deal with each of the points that he raised.
	On the background to the current negotiations, like the committee and many of your Lordships today, the Government believe that the next financial perspective is an important opportunity to increase both the effectiveness and transparency of EU expenditure and to consider how allocations within a limited budget can best be refocused in support of the Union's priorities, including enlargement and the Lisbon agenda.
	The Government have therefore proposed that all EC budget spending should be objective-focused, evidence-based, and based on a proper assessment of whether the Union budget is the best instrument for adding value at the EU level. It should also ensure sound financial management and budgetary discipline, and an equitable distribution of spending across the EU, consistent with value-added principles and objectives.
	As a result of that stance, the Government have been at the forefront of calls for further reform to stabilise the budget at no more than 1 per cent of EU GNI or €815 billion at June 2005 values. That is on a commitments basis, and represents a 6.5 per cent real-terms increase compared to the current financial perspective, and is both realistic and affordable.
	The noble Lord, Lord Kerr, made an interesting point about the historical perspective of the scale of the budget. Whatever the areas of discussion, at 1 per cent of GNI or just more than that the figures are a long way from the hallmarks of a superstate, which was suggested by the noble Lord, Lord Campbell of Alloway. That was a telling point.
	My noble friend Lord Lea suggested that the Treasury was being too dogmatic in nailing its colours to the mast at no more than 1 per cent, but I do not agree. It is right to do so. At the current spending levels of the programmes undertaken, that is about where we are. The European Court of Auditors has already commented on the inability of the budget to be met in full in some recent years. There have been significant surpluses on the budget in the past three years, I think. That is why we believe that 1 per cent is right.
	While respecting the Brussels agreement, we will press for a more liberalised and market-focused agricultural sector, including the ongoing reform of the sugar and dairy sectors, and will support further modulation. We want to refocus the structural and cohesion funds on the poorest member states, within an overarching framework agreed by all member states. We want to refocus spending within internal policies on a smaller number of initiatives with demonstrable added value, particularly research and development, and freedom, security and justice. We also want to improve effectiveness of external actions in support of the EU and UK's external objectives, to which the millennium development goals are central, while retaining flexibility to cope with evolving needs and crises.
	Like the committee and many of your Lordships, the Government believe that the Commission has failed to respond adequately to those challenges. In its communications of February and July 2004, the Commission proposed a significant increase in the scale and scope of its policy responsibility, supported by a total EC budget for 2007–13 of more than €1 trillion, a real-terms increase of 34 per cent compared to the current financial perspective. The Government believe that such proposals are unrealistic and unacceptable. Indeed, the European Court of Auditors has been unable to sign the accounts for the tenth year in succession, and believes that it is contradictory for the Commission to try to increase its budget when it does not appear to have the ability to absorb it at current levels.
	The latest presidency proposals amount to a significantly lower overall budget than that proposed by the Commission—around 1.09 per cent of commitments—but one which is still €85 billion too high. There is still no consensus in the Council on own resources. The presidency is still pushing to achieve a political deal on the next EU budget from 2007–2013 at the June European Council. We are happy to work towards that, but it is better that we have a deal that involves an overall budget of no more than 1 per cent of EU GNI, significant expenditure reform, and retention of the UK abatement, rather than one that concludes earlier. My noble friend Lord Barnett concurred on that point.
	Although there is a good case in principle for—

Lord McKenzie of Luton: My Lords, technically, the noble Lord's point is correct—we contribute to Europe, because we are a part of Europe and we obtain direct benefits from it in terms of contributions to us and from being part of the wider union and everything that flows from that.
	The noble Lord said that his contribution was gloat free, although there was much in it that seemed to be gloating. Referring to people who work in the Union as being unemployable elsewhere and "all after their little perks" does not seem to be constructive.
	The noble Lord, Lord Pearson, raised two points. He is right that it has been 10 years since the European Court of Auditors has been able to sign off the accounts, but reforms, including a new accruals accounting system, which is now up and running, and new financial controls, are in place. These run on from what happened in 1999 and were put in place in 2003. We must wait to see the results of that.
	Regarding the broader question of whether we should leave the EU—the Government's answers to that is "clearly not". There are huge benefits to us and to Europe generally from being part of the union. I do not have time to debate them all today—we have done that before and I am sure that we shall return to that issue.
	The noble Lord, Lord Dykes, asked about harmonisation of the budget process. I have dealt with that. Regarding whether we are being timid on infrastructure spending, the right role for the EU, where it can add value and be most effective, is in its pump-priming of investments—investment might come from the private sector or from national budgets—and to get things going, particularly on trans-national projects. That is where the thrust of the spending should be.
	The noble Lord, Lord Howell, broadly supported at least the Government's rhetoric, which we appreciate. In terms of spending on aid, we must demonstrate that spending through the EU improves effectiveness and that there is a better focus on the millennium development goals.
	If I have not answered all the questions that have been raised, my colleagues will be happy to follow up in writing. I believe that this has been a constructive and helpful debate. I thank the committee again for its far-reaching and substantive report. I hope that we agree that the future direction of the European Union and the current negotiations are of the utmost importance to the future of the EU and to this country. We believe that the principles that the Government have set down are right for the Union as a whole, right for each of its member states, right for the UK and right for its relationship with the rest of the world.

Lord Radice: My Lords, I thank the noble Lord who spoke on behalf of the Government for his comprehensive reply. He set a fine example as he answered pretty well every question raised, including some rather curious ones. The quality of the debate was high and there have been some fine speeches.
	I thank the noble Lord, Lord Kerr, for his brilliant maiden speech. It was absolutely perfect. He is clearly going to be an extremely valuable Member of this House, as we knew he would be. He is already an extremely valuable member of our committee. Long may he continue in that.
	The noble Lord, Lord Whitty, made a maiden back-bench speech. It was good to hear him and what he had to say about the rebate was fascinating. I was not surprised that the Minister wanted to reflect on what he had to say; I certainly would want to do that.
	Inevitably, the debate has partly been about events in France and the Netherlands. It is absolutely right that it should be because those events raised the question of the nature of the EU. But I disagree with my noble friend Lord Barnett. I do not think that those events make debates about the budget a dead duck. On the contrary, the budget goes to the heart of what an enlarged EU should be about. We are bound to return to the subject during the next few months in our presidency. This debate has been a very helpful beginning to that debate. I thank all noble Lords for their contributions and I beg to move.

On question, Motion agreed to.

Lord Holme of Cheltenham: My Lords, I am pleased, and perhaps even relieved, that your Lordships finally have the opportunity to have this debate, since it is now nearly eight months since your Lordships' Select Committee on the Constitution, then under the chairmanship of the noble Lord, Lord Norton, published its report, Parliament and the Legislative Process.
	I am also delighted to see the noble Baroness the Leader of the House in her place this evening to reply to the debate, not least because I am well aware of how seriously she takes the issue of how we could legislate better. The committee benefited greatly from her evidence in its deliberations, as we did from the evidence of many Members of the House of Commons and of this House, as well as many distinguished outside experts. It is also a great pleasure to see that we have a "full house" of leaders. That is reassuring because it gives an indication that these matters are not marginal but are central to our success as a legislature.
	But amid all these expressions of pleasure, I sound a slightly captious note. Our report did not receive a response from the Government for six months, and then, the noble Baroness will recall, almost as an afterthought after the election had been called. When she replies, it would be useful to hear how she thinks the response to such reports as this, and therefore the chance for your Lordships to indulge in meaningful debate, could be speeded up.
	I mentioned my predecessor as chairman of the Constitution Committee, the noble Lord, Lord Norton, and I am pleased that, despite what I know is a difficult teaching schedule for him, he is able to be in his place this evening for this short debate. The report owes as much to his skills as chairman and as an active draftsman as it does to his scholarship and his detailed knowledge of our parliamentary institutions. So if I say that he was in a real sense the father of this report, it is not simply the obligatory piety that all chairmen owe to their predecessors. It is a genuine expression of the appreciation of his leadership on this report and this issue that I know is shared by the whole of the committee. I am pleased to see that other members of the committee, past and present, plan to speak this evening as well as other noble Lords with relevant experience and insight.
	Of course, our report, focusing, as it does, on parliamentary scrutiny of legislation, did not come out of a clear blue sky. There have been several signposts over the years that pointed in the same direction. There have been two commissions of the Hansard Society, of which I have the honour to be chairman. The Rippon commission reported in 1993 in Making the Law and the Newton commission reported in 2001 in The Challenge for Parliament: Making Government Accountable. There was also the Conservative party commission in 2000, chaired by the noble Lord, Lord Norton, which reported in Strengthening Parliament, and the House of Commons Modernisation Committee published its reform programme in 2002. They all well articulated the case for improvement in the way we work, as does the latest Hansard commission, chaired by the noble Lord, Lord Puttnam, which published its report a week ago and made the parallel case for improvements in the way we represent our work to the public.
	It would be ungracious not to acknowledge that some significant progress has been made since 1997. Unhappily, the first manifestation of progress, the so-called "programming" that was introduced with some fanfare as a cross-party approach to the inevitably contentious issue of timetabling, has rapidly become a matter of straightforward partisanship. That was bound to be the case in the absence of the introduction of some form of business committee, which would replace the opacity of the usual channels with more transparency and greater independence from the wishes of the Executive. As the Constitution Committee pointed out three years ago in its devolution report, we now have a working model—an example of a business committee—in the Scottish Parliament. We deserve to hear from the Leaders of both Houses, the noble Baroness and Mr Hoon, what the specific objection is to the introduction of a business committee at Westminster, rather than being given the brisk brush-off at paragraph 40 of the Government's response to our report.
	However, on pre-legislative scrutiny of draft Bills, there has clearly been substantial progress in recent years: between the 1997–98 and 2003–04 Sessions, 42 draft Bills were published. Here I should pay tribute to the leadership of Robin Cook in his spell as Leader of the House in another place who took much of the initiative in this matter. Perhaps this is also because pre-legislative scrutiny, done properly, potentially represents a win-win for Parliament and the Government. As Alex Brazier, senior research fellow of the Hansard Society points out in New Politics, New Parliament? which is to be published this month, it is a win for the Government who get better-tested and considered legislation, and it is a win for Parliament which gets to do the testing and considering, which is the role that we should be playing.
	Significant issues are still outstanding on pre-legislative scrutiny. Phil Woolas, as Deputy Leader of another place, said last year:
	"The Government's view is that a Bill should be published in draft form unless there are good reasons for not doing so".—[Official Report, Commons, 24/2/04; col. 19WH]
	That is excellent. But who decides, and on what grounds? There are no formal guidelines or procedures to indicate what sort of Bills should be subject to pre-legislative scrutiny and whether that should be done by Select Committees, which in many cases are becoming dangerously overburdened with so many so-called core responsibilities, or, as will commend itself to Members in this House, by a Joint Committee of both Houses.
	We specifically recommended in our report that the Government should move from deciding which Bills should be published in draft each Session—publication by exception, as it were—to deciding which Bills should not be published in draft—publication by rule. We also said that where the decision is taken not to publish in draft, the reasons should be given in the Explanatory Notes to the Bill.
	To those eminently reasonable proposals, I am afraid we received a rather dusty and disappointing answer. Despite Mr Woolas's encouraging words last year, the Government's reforming zeal seems to have ebbed, and with it their sights have been lowered. According to their response, we are not talking about all Bills, unless there is a good reason—the Woolas formula; we are not talking about most Bills; we are not even talking about an increasing proportion of Bills; we are simply told in the Government's response that the ambition now is to maintain the proportion of Bills published in draft.
	For a Government who are conspicuously addicted to ambitious targets, that seems to be excessively modest. Can we look for no more progress in this Parliament than simply maintaining the proportion, particularly given the remarks of the Deputy Leader last year?
	Nor did the Government like the idea of having to explain why a Bill might not be published in draft, although I know that Members of both Houses would be extremely receptive to a perfectly reasonable explanation; for example, that it is emergency legislation. I do not see that there would be any problem in explanations from the Government being accepted in a perfectly normal way. However, I suspect that the proposal that the Government should explain why they were not going to publish in draft smacks too much of parliamentary accountability to commend itself to those mysterious characters who seem to leave the darkness of the Government's Whips' Office only occasionally for a little light exercise gliding up and down the usual channels.
	I should like to concentrate principally on post-legislative scrutiny. If one were to identify the Achilles' heel of the British system of government, this is where one would find it. We have a decision-making system without a proper feedback mechanism able to learn from experience in such a way as to improve future decisions. The great biologist Jonas Salk pointed out that organisms without feedback are doomed to extinction. In her evidence, the noble Baroness, Lady Amos—if I may couple her with Jonas Salk—also talked of the need to learn by looking back and thereby improving future performance.
	That must be a right analysis, yet in our forward rush as legislators, relatively little time is spent either in Whitehall or in Westminster checking whether the effects of any given Bill were those intended as opposed to the time spent on yet more initiatives. What work is done—I concede that there is some—is, in the words of Peter Riddell, "patchy at best".
	Part of the key to improvement is to ensure absolute clarity of aim in any new Bill. That is important because the prevailing genius of Whitehall, and a method of elevation in the higher ranks of the Civil Service, is that wonderful ability to bridge two positions with a form of words that implies all things to all men. Of course, that is the enemy of good legislation. We want clarity.
	In our deliberations we were tempted by what they have in New Zealand which is a purpose clause in every Bill. In the end, we were persuaded by Sir Geoffrey Bowman that that might have unintended legal consequences, but we were convinced that the introductory section of the Explanatory Notes of every Bill should always contain a clear explanation of the purpose of the Bill, including criteria by which it could be judged subsequently to have met its purpose. That is the basis both for clarity in drafting and political intention and for subsequent review.
	The Government's response to that is not unhelpful. They suggest that they might involve the Law Commission in trying to work out how that should be done—if I understand it rightly—not only in the definition of what should be done but perhaps undertaking some of the work of the post-legislative scrutiny. I would be interested to know from the noble Baroness how that possibility mentioned in the response is proceeding. The Government also leave the door open to a statement of success criteria, which is good news.
	However, the issue of effective post-legislative scrutiny raises serious issues of resources, as both we and the Government have identified. Clearly, there is a role for departmental review within Whitehall; there is a possible role, as I have just mentioned, for the Law Commission; there may be much work that the National Audit Office could undertake; and it may be that departmental Select Committees should commission specialist experts. But the job must be done if we, in this House and another place, are to be wise legislators rather than hyperactive legislators, moving on rapidly to cover up our blunders in a flurry of new activity. For that reason, we recommend that for most Bills post-legislative scrutiny should take place within three years.
	Just now I talked of the risk that Select Committees might become overloaded, but I wonder whether that may not be true of Parliament as a whole. In 1947, LS Amery described Parliament as "an over-worked legislation factory". Since then, the Stakhanovite zeal of successive governments to be judged by their legislative output has become even more frantic. Is it not likely, is it not even probable, that there is a trade off between quality and quantity? If we want to produce legislation that is carefully drafted, clear in its purpose, well discussed with lay and expert public alike, improved by our collective wisdom and rigorously analysed for its subsequent effectiveness, might we not do well to do less but do it better?
	A final word about connection with the public. Research shows that there is a gap between citizens interested in and aware of issues as never before and their Parliament whose work they too often do not understand or even connect with their personal and civic agendas. It is imperative that the public, both expert and lay, are given every opportunity at every stage of scrutiny to be informed, involved and consulted. Good work is now being done both in Parliament and by bodies such as the Hansard Society. New technology can help, but this is just a start. We need to rewire and re-engineer the way in which we work in Parliament so that as well as the Lords and the Commons we recognise that we have a third active partner in legislation, the people themselves. I believe that that is the highway to better laws and a path to better democracy. I beg to move.
	Moved, That this House takes note of the report of the Select Committee on the Constitution on Parliament and the Legislative Process (14th Report, Session 2003–04, HL Paper 173).—(Lord Holme of Cheltenham.)

Lord Carter: My Lords, I welcome this excellent report which is full of practical and well founded recommendations. Since publication of the report, we have seen in their manifesto the Government's proposals to appoint a Joint Select Committee. I shall quote from that as it will help the House as it relates to the work of the committee:
	"Following a review conducted by a committee of both Houses, we will seek agreement on codifying the key conventions of the Lords, and developing alternative forms of scrutiny that complement rather than replicate those of the Commons; the review should also explore how the upper chamber might offer a better route for public engagement in scrutiny and policy-making. We will legislate to place reasonable limits on the time Bills spend in the second chamber—no longer than 60 sitting days for most Bills".
	There was also the report of the Labour Peers' group so ably chaired by my noble friend Lord Hunt of Kings Heath on the reform of the powers, procedures and conventions of the House of Lords. The House held a full debate on that report last Session. If we take all that together, there is clearly much to take into account when considering Parliament and the legislative process.
	The report is based on the three areas of parliamentary process—pre-legislative scrutiny, the passage of legislation and post-legislative scrutiny. There is much to be said for the proposal in the report that the great majority of Bills should be published in draft. How best to examine draft Bills and to make proposals for their improvement should be carefully considered.
	There will be a real time and resource problem if every draft Bill is to be subjected to formal consideration, with evidence taken and so on through either a departmental Select Committee in the Commons or a Joint Select Committee of both Houses.
	The resource problem is not just one of staffing, there is also the problem of finding the number of MPs and Peers to provide the membership of the parliamentary committees which would be set up to take evidence and report. I am sure that the Government approach of dealing with the matter on a case by case basis is the right one.
	Having chaired two Joint Select Committees on the draft Mental Capacity Bill and the draft Disability Discrimination Bill and sat on a third, the draft Mental Health Bill, I am a great believer in the formal process of pre-legislative scrutiny. That can be provided only for a limited number of Bills.
	In my view the right approach would be to publish as many Bills as possible in draft. A number of those would be considered by departmental committees in the Commons and a smaller number by Joint Select Committees of both Houses. The remainder should be subject to wide consultation to be based on written submissions, with the Government's response published with their proposals for amending the draft Bills as a result of the consultation.
	Getting the maximum number of Bills published in draft in the first place is the main hurdle. Appropriate scrutiny can then be decided, as I have said, on a case by case basis.
	A general point regarding timing should be borne in mind when considering both pre-legislative scrutiny and the passage of Bills, which is generally overlooked. Now that four-year Parliaments and spring elections seem to be becoming the norm, the life of each Parliament is now divided into one long 18-month Session, two normal Sessions of 12 months and a short pre-election Session where electoral considerations rather overtake the considerations of the smooth passage of business. I am putting that as politely as I can.
	If we turn to the actual passage of legislation, I would propose one major change; namely, that the carry over of Bills should become more or less automatic. I can see nodding from the other side of the House from a former leader of the Commons, the noble Lord, Lord Norton of Louth. There is mention in the report of a rolling programme of legislation and there have been proposals to abandon Sessions altogether and to have each Parliament as one long Session.
	In my view the existing Session structure should remain, with the majority of Bills still being announced at the beginning of each Session. But, as Bills become ready for introduction as the Session progresses they should be introduced and then carried over to the next Session. A further refinement would be to give each Bill its own life of either the 14 months which is mentioned in the report or the 12 months suggested by the Hunt committee. However, I believe that that would require amendments to the Parliament Act.
	Such a process would automatically smooth the progress of legislation and reduce but not completely avoid the present log-jam at the end of each Session. I should point out that the Opposition would not lose its power to press for changes as each Bill reaches the appointed time for completion, either the 14 or 12 months. In fact, the Opposition will be able to negotiate from a position of strength on every Bill and not just those which are piled up at the end of the Session.
	There is the further advantage of giving the Commons something to do in their fallow period between, say, the end of June and the end of the Session. Bills could be introduced in the Commons in the summer. They could be carried over and would then come to the Lords in the next Session.
	It would be relevant at this point to say something about the Government's proposal of a limit on each Bill of 60 sitting days in the Lords. That is of course not a new proposal. The 1968 White Paper on Lords reform in paragraph 53 stated:
	"The House of Lords would have a period of 60 parliamentary days in which to consider a Bill".
	That White Paper was approved in this House on a vote.
	There has been some misunderstanding about the actual effect of a 60-day limit. A big Bill that requires eight days in committee would require a total of 14 sitting days—one for Second Reading, eight for Committee, four for Report and one for Third Reading. The great majority of Bills would require less time. Of course a 60-day limit would prevent the Government exercising undue delay in taking the stages of a Bill—the Hunting Bill springs to mind.
	There is, however, the problem of defining a sitting day. The number of days for legislation in the Lords is constrained by having the weekly debate day, which is now on a Thursday. Only three days per week are available to the Government for legislation in the Chamber between State Opening and the end of June. Also the sitting days in the Chamber are of about six and a half to seven hours duration, less if there is a Statement. In Grand Committee the sitting day is only four hours, from 3.30 pm to 7.30 pm. In a normal Session of 140 to 150 sitting days, the number of days actually available for legislation in the Lords is fewer than the total number of days.
	I cannot help feeling that rather than trying to set a limit by legislation, it would be better to establish a limit by agreement as a convention of the House, in rather the same way as the intervals between the stages of a Bill are now a convention; they are generally observed but they can be changed by agreement. The Companion might say that,
	"normally Bills should not exceed 60 sitting days whilst in the Lords".
	I hate to be critical, but the wording in the manifesto states:
	"We will legislate to place reasonable limits on the time Bills spend in the second chamber—no longer than 60 sitting days for most Bills".
	Quite how you define "most" legislation, I am not sure.
	I suggest one other change to our procedures in considering legislation. I made this suggestion in my evidence to the constitution committee. In my view, for virtually all Bills the Committee stage, whether on the Floor of the House or in Grand Committee off the Floor, should be conducted by Grand Committee rules, that is, without votes. In my experience, it is much easier to secure changes by the Government to a Bill if the Committee stage is a genuine process of scrutiny and discussion of possible changes, rather than an artificial battle between a Minister whose brief says "resist" to every amendment and an Opposition who have to pretend that they might vote on everything. The House works much better in Committee in collegial rather than in adversarial mode. The battles of principle—and there will be some of course—should be decided by votes on Report.
	I referred at the beginning of my speech to the Government's proposal for a Joint Committee of both Houses to examine the powers and conventions of the House. Such a committee would no doubt wish to examine the operation of the Parliament Act. The Act certainly needs some technical changes to improve its clarity. Two Bills were nearly lost inadvertently through different interpretations of the Parliament Act. The Planning Bill was accidentally killed in the Commons and had to be revived through the good offices of the Opposition by a special, and probably unique, Motion in the Lords—illustrating, incidentally, the flexibility of our procedures compared with those in the Commons.
	Also the authorities in the two Houses took differing views during the final stages of the Hunting Bill about the precise effect of the Parliament Act. There really is a need for clarity in the interpretation of the Act.
	Mention of the Parliament Act brings me to what might be called the new McNally doctrine regarding the Salisbury/Addison convention, on which it appears that the noble Lord, Lord McNally, seems to have declared UDI. The noble Lord, Lord McNally, and I both contributed chapters to a recent publication, Parliament in the 21st Century. The noble Lord, Lord McNally, in his chapter said:
	"I do not want to see a Second Chamber which would challenge the pre-eminence of the Commons".
	Perhaps when the noble Lord, Lord McNally, winds up he will be good enough to reconcile that statement with his newly declared position on the Salisbury/Addison convention.
	The noble Lord, Lord Strathclyde, is winding up for the Opposition. That would be a very good opportunity for him to state the Official Conservative Opposition view of the Salisbury/Addison convention. The noble Lord may remember that he wrote to me before the 1997 election confirming that if Labour were to form the Government the Conservative Opposition would observe the Salisbury convention. Has that position changed?
	There is, of course, a fundamental difference between the Conservatives and the Liberal Democrats so far as concerns the Salisbury convention. I believe that the Conservatives have it firmly in mind to form a government as soon as the opportunity arises and would be powerfully aware of the dangers of creating a precedent that would affect them when in government. This is not a possibility that unduly troubles the Liberal Democrats.
	To conclude, I quoted at the beginning of my speech from the Government's manifesto commitment to set up a Joint Committee of both Houses to consider the relationship between the two Houses and related matters. I cannot do better than to conclude by quoting from my own chapter in Parliament in the 21st Century. I should point out that my chapter was drafted 18 months ago, long before the Labour Party manifesto was being considered. I said:
	"Whatever the eventual reformed composition of the Lords, whether appointed, elected, or a mixture of the two, the powers, procedures and conventions of the Lords will have to be re-examined . . . There has to be a balance between the right of the Lords to revise and scrutinise legislation and, indeed, delay it, and the right of the elected Government to obtain its programme of legislation.
	A settlement between the political parties in the two chambers in setting out the agreed modalities of the legislative process will have to be reached. To codify such a settlement completely in legislation is possible but this would be an inflexible solution, although some revision of the Parliament Act may be necessary. It would be better to reach agreement on a concordat setting out the relative powers of the two chambers of Parliament and the conventions which should govern the proper conduct of the Lords. Without such an agreement and understanding the House of Lords will have the considerable power of a House where the government of the day is always in the minority without the responsibility or accountability of an elected House where the majority party forms the Government. It should not be beyond the power of responsible parliamentarians to find a solution which firmly establishes the scrutinising, revising and eventual delaying powers of the Lords while allowing the elected government to obtain its programme of legislation".

Lord Wakeham: My Lords, this is not the first time that I have followed the noble Lord, Lord Carter, in a debate of this sort, and I guess that it may well not be the last time, either here or in some other forum. As he spent the greater part of his ministerial career seeking to get government business through, and so have I, it is not surprising that we agree on quite a number of issues. However, we do not necessarily agree on all the issues. There were one or two things in his speech that worried me somewhat. One thing that I take from it which I think is very important is that, in whatever we do in this Chamber, to lose the flexibility that has been the hallmark of how we have managed to get over a whole range of difficulties in the past would be a serious mistake.
	I congratulate the Select Committee on its most excellent report. If we move in the direction it recommends, real progress will have been made.
	Reading the exchanges in the evidence, as well as the conclusions, it was clear that the committee had a considerable amount of experience and expertise. Indeed, from somewhere in the evidence I recall a response to one question where the Minister made the point that the questioner had more experience in these matters than did the Minister. All that was true. The answers that Ministers gave in many cases seemed to me the sort of answers that I might have given when I was in their position. Officials would be mortified if Ministers did not remind the committee of some of the very practical difficulties that any government would see in some of the committee's proposals.
	In my view the committee will not get everything it wants, but in my judgement the committee was right in most of its recommendations. If, as a result, it gets some significant improvements in the way legislation is scrutinised, so much to the good.
	As the noble Lord, Lord Carter, said, effective scrutiny is not just about the form and shape of the methods of scrutiny. It is about a real desire and ability of Members of this House or of another place wanting to give up the time, not just in scrutinising the Bills, but in the considerable amount of work and study necessary to be able to make a real impact.
	I fear that the pressures and changes in the House of Commons have over recent years tended to mean that they look much more at the high-profile issues and less at the grinding detail that is necessary if we are going to get legislation right. Of course, the House of Lords has an enviable reputation in its work in the Select Committees and is in an ideal position to make a major contribution in any improvement in any pre and post legislative scrutiny.
	One of the great advantages of the House of Lords is that among its Members are a whole lot of noble Lords who are not primarily politicians, who often have great experience and expertise away from this House. They can bring a greater insight on issues than others who have spent a lifetime in politics.
	Perhaps I may refer for a sentence or two to a theme on which I touched in the debate on the gracious Speech. I am not sure that we in this House use that expertise in the most effective way. One only has to talk to some Members of this House—industrialists, professors, eminent people—who have made it clear that they find some of our procedures arcane and too formal to make the best use of their expertise. More pre-legislative and post-legislative scrutiny would use their talents much more effectively.
	All the helpful proposals depend on there not being great changes in the composition of this House, or at least not too quickly. It is important to form a view on what this House should be doing before we go down the road of changing its composition too drastically. Frankly, a bunch of second-rate politicians who cannot get into the House of Commons or the regional parliaments or assemblies are not going to make effective members of a revising Chamber.
	Thirdly, the House will not get at once all the blueprint or procedural changes that the committee recommends, but it has to seize the opportunity to make what progress it can. In my view, it might be a draft Bill, a White Paper or even a party manifesto, which should give the appropriate Select Committee a chance to throw some well-informed non-partisan light on a particular subject. In some ways the ideal would be for a report of a non-partisan House of Lords Select Committee before any detailed proceedings began in either House, but that may not be too practical, at least at the moment.
	Perhaps I may give an example of practical progress. I have the honour to be the chairman of the House of Lords Economic Affairs Select Committee. For the past two years, and, we hope, again this year, we have formed a sub-committee to look at aspects of the Finance Bill while it is still in the Commons. We have published our report before Report stage in the Commons and what we have had to say has frequently been the subject of discussions in the debates in the House of Commons.
	We are very careful: we take only a few clauses and we look at them in detail. We never express a view on the rates of tax or on the incidence of tax, but we take extensive evidence from tax practitioners, lawyers and officials from the Treasury, Inland Revenue and Customs and Excise. We concern ourselves with the need for the changes, the levels of consultation, the practicalities and administrative details and their likely effectiveness. It has proved a very worthwhile exercise, giving all parties involved a chance to explain the issues and the problems as they affect them. Not least was the excellent way in which officials from the Inland Revenue and the Customs and Excise were able to tell us in detail why they thought the changes were necessary. In all cases—I think that that is right—the officials proved to be effective and extremely well informed witnesses. They shone considerable light on the legislation that Parliament was passing.
	I again congratulate the committee on a most effective report. I expect that the committee will get some progress, and that we will progress. But, as the noble Lord said, quoting a journalist, it will be "patchy" and may happen in unexpected ways; none the less, I am sure that there will be progress.

Baroness Gould of Potternewton: My Lords, like the noble Lord, Lord Holme, I congratulate the noble Lord, Lord Norton, as chairman of the Select Committee. His expertise was invaluable in steering us through the production of this important report.
	In its introduction the report states:
	"If Parliament gets it wrong, the impact on citizens can on occasion be disasterous; and history has shown examples of legislation that have proven clearly unfit for the purpose".
	That principle should guide all our deliberations. The Select Committee was right to concentrate in detail on one aspect of the legislative process: primary legislation.
	Over the years, many reports and analyses have been written on this topic—referred to by the noble Lord, Lord Holme, as signposts. Unfortunately, a number of those have started from the negative premise that the process is in decline. Although that provides headlines for the media, it does little else. The debate benefits far more from the approach of the Norton commission, which acknowledged that things were getting better but that further improvements were needed.
	The Select Committee report picks up that theme against the background that Parliament cannot act in a vacuum. Parliamentarians are not the fount of all wisdom; listening to informed opinion is a crucial part of the process at all stages, starting with consultation on the policy behind the issue. As well as hearing from organisations with a vested interest in the subject, ways must be found to do the more difficult job of engaging individuals.
	In her evidence to the committee, the example highlighted by my noble friend Lady Amos of the consultation process used for the Green Paper Every Child Matters shows how a little imagination can overcome that problem. Two consultations were prepared: one for adults and one especially for children, 14 to 19 year-olds. Nine ministerial and 60 other events took place around the country and youngsters were able to talk directly to the Minister in a web chat. That resulted in more than 4,000 responses from youngsters, twice the number received from adults.
	If the Government are serious about such consultation—I genuinely believe that they are—there must be consideration of the best way to get the maximum response and in particular what new technology should be used. The principle of consultation, although in a different context, is highlighted by the Puttnam commission, set up by the Hansard Society, on the communication of parliamentary democracy. It says that, for Parliament to re-engage with the public, it can no longer be seen as a place that involves people only once every four or five years at the ballot box. We must continue to look at other ways of connecting with the public.
	Pre-legislative scrutiny of draft Bills provides another such opportunity for the Government to hear the public's views. The committee and all who gave evidence welcomed its increasing use. Although I appreciate that, for a number of reasons, it is not possible to have scrutiny of all Bills, the report is right that wherever possible it should be an established and integral part of legislation, as in the Scottish Parliament.
	Like the noble Lord, Lord Holme, I believe that when pre-legislative scrutiny is not possible, an explanation should be provided. Therefore, I do not wholly accept the Government's response on that point. If, as the response says, an explanation for the non-production of a draft Bill can be given by Answer to a Written Question or oral Question, why can it not be included in the Explanatory Notes to the Bill? It would save everyone time and eliminate speculation about why it has not happened.
	The value of scrutiny on the principle of a Bill cannot be over-emphasised. I have just participated in a scrutiny committee for the first time. We were able to examine in depth the principle behind the legislation and to bridge a gap in order to achieve that principle. As a result of that experience, I look forward to participating in the Bill as it goes through the House.
	Interestingly, Robin Cook commented in his evidence to the Select Committee that Commons scrutiny committees are made up of very different people from those who form the Standing Committee. I am not sure whether he was aware that that does not apply in this House. The knowledge learned from being on a scrutiny committee is seen to be used effectively in the later examination of the Bill.
	Where I have a minor disagreement with the Select Committee report is that it identifies the use of joint pre-legislative committees only for big and complex Bills. My view is that it should be the normal procedure whenever possible. There is great value in Members of both Houses pooling their experiences. I do not believe, as my noble friend Lord Carter does, that Members cannot be found to sit on these committees. I am certain that Members could be found if they were approached.
	Witnesses made other suggestions, which were highlighted in the report, about how to further involve the public in different stages of the Bill, such as further evidence being taken by special Standing Committees, Standing Committees in the Commons or Grand Committees in the Lords. My reservation is that that would increase the time taken to get the legislation on to the statute book, but it is right that at some stage every Bill should be subject to detailed examination by a committee empowered to take evidence.
	As the report says, carry-over is the answer for Bills that require more time to ensure effective scrutiny. As has been evidenced in practice, it should not be necessary for there to have been pre-legislative scrutiny for a Bill to be carried over. Although it appears that there is general support for carry-over—I agree with my noble friend Lord Carter on this occasion—it is little used. There seems to be a reluctance to break out of the existing sessional mentality.
	It is encouraging that the Government recognised in their response that there are some benefits to a rolling legislative programme. But they qualify that by saying that the sessional cut-off is currently an integral part of our programme. I cannot envisage annual Sessions as we know them being eliminated very quickly, but I would be grateful if my noble friend could elaborate further on whether she envisages a time when a two-year rolling programme is the norm.
	I started by referring to the impact of legislation on citizens, but the only way of discovering the impact is by monitoring the effect of the legislation. We hear when problems become apparent, such as in the much-quoted Child Support Act 1990, but we rarely hear when legislation has worked well and achieved its objective.
	The noble Lord, Lord Holme, said that the Government had asked the Law Commission how post-legislative scrutiny could be achieved, what the options were and who should take the responsibility. When is the Law Commission expected to report and how will implementation follow?
	There is clear disagreement between the Government and the committee on the thorny question of a business committee. The Select Committee discovered that it was a major development in the devolved legislatures. A corporate body takes responsibility for considering the business of the House. In all instances the committees met regularly, once or twice a week, to discuss forthcoming business and arrange the timetable. Such a committee would not replace the usual channels but would ensure a more inclusive process. I genuinely believe that there would be greater advantage in making the process more transparent and removing the mystique.
	The case has been made by a number of the commissions and has received cross-party support. I can do no more than quote the evidence given by my noble friend Carter to the committee about his experience as Chief Whip in the House—I apologise for not giving him warning. He said:
	"In the planning of the session, the draft bills and all the rest of it, that could equally well be done by a business committee because, in a sense, it is not adversarial; it is not political; it is just the programme of work".
	On the basis of that evidence, I hope that the Government will further consider, and not just reject, the introduction of a business committee.
	In conclusion I refer to the many reviews produced on the process of legislation. It reminds me of when I was responsible for the organisation of the Labour Party and the many reports written on how to improve that organisation, resulting in slow and marginal change. To speed the process up, I did what some people would never have believed possible: I established a review of reviews. Everybody sat down and went through all the words—no witnesses, no evidence, just the words that had been printed. We put together all those proposals, and, from that, we were able to make substantial change.
	I am not suggesting a similar exercise now, although it might be a good thing. Nor am I suggesting that progress has not been made: it has. However, as the Select Committee says, more needs to be done. I therefore hope that the proposals before us will be implemented and will be the basis of improving our process of legislation, as review after review has urged us to do.

Lord McNally: My Lords, it is reconcilable. I cannot challenge the supremacy of the Commons because the Parliament Act is in place. But I will use every power at my disposal if a House of Commons, with a government elected on 36 per cent of the vote, tries to ram through restrictions on the power of this House, which is, in many ways, the last defence, the last check and balance on the Executive. I urge the Government not to go that way, but to seek broader agreement on these matters, and not to start wheeling out a convention that is tainted because of when it was made and the present realties.
	I shall not go on. I was going to mention the Puttnam report, which I think might justify a debate in its own right. Perhaps one of the parties can find an opportunity for that. I thank the committee for such a stimulating debate and I shall finish with what the noble Lord, Lord Norton, pointed out: political will is the key to this.
	"The fault . . . is not in our stars,
	But in ourselves".
	Parliament and parliamentarians have to hold on to power to check and balance the executive. That is what we are here to do, and that is what we will continue to do.

Lord Strathclyde: My Lords, the noble Lord, Lord Dahrendorf, said that this was an important debate, and so it has been. I should like to join noble Lords in congratulating the noble Lord, Lord Holme of Cheltenham, on securing, at last, this debate, my noble friend Lord Norton of Louth, on chairing the committee in the past, and the other members of the Constitution Committee on producing an extremely valuable report. It is not just valuable: it has been useful and interesting. One has only to look at the political weight of the contributors: my noble friends Lord Wakeham and Lord MacGregor, the noble Lord, Lord Carter, the noble Lord, Lord Dahrendorf, and other noble Lords.
	I join the chairman of the committee, the noble Lord, Lord Holme of Cheltenham, and my noble friend Lord Norton of Louth in regretting that it is now seven months since the report was published. Meanwhile, the Government are, quite unacceptably in my view, telling this House that they will use the power of another place to require this House to scrutinise and pass all stages of government legislation in fewer than 60 sitting days, which is a far shorter period than we have waited for this debate. I join my noble friend Lord Elton in criticising that. I was not entirely certain whether the noble Lord, Lord Carter, was offering an alternative or a complement to the 60 days; I shall have to re-read his words on that. I wait to see how the debate on the 60 days unfolds over the course of the next few months.
	One of the principles of the Gareth Williams reforms was that more time should be found for Select Committee debates. Yet three Select Committee reports have been awaiting debate since last July. Perhaps the seriousness with which the Government take Select Committees might be a subject for a further study by the noble Lord's committee, including what might be instructive post-report scrutiny into what notice the Government take of what is said.
	Having listened to the tone of this debate, I think that we all subscribe to the basic premise of the report: that scrutiny of legislation can and must be improved. I particularly agree with the report's remarks in Chapter 7, to which the Government, perhaps significantly, have not responded. The report states, in paragraph 221:
	"We have left to the end perhaps the most important point of all. That is, that quantity should not be confused with quality. There are imperatives within Government which have encouraged a significant growth in the volume of legislation".
	That was the point made by the noble Lord, Lord McNally. It was a good point when he made it, and it is worth repeating. Anyone who listened with a sinking heart to the dismal litany of Bill after Bill in the gracious Speech last month as the legislative gates opened again can agree on that. As Mr Tyler told the committee, Parliament passed more law in the past half-century than in the preceding four centuries put together, and the committee itself stated that the volume of new law in any year is now frequently twice that of before the 1990s. Only Ministers can call a halt to that, but have they the will to do so? The signs in this year's programme are deeply discouraging. That is not to mention the torrent of secondary legislation, which is now quite out of control. Parliament, perhaps through the new Joint Committee being set up by the Government on relations between the two Houses, must seek ways to limit those frequently life-changing decrees. So I very much support the view taken by the noble Lord, Lord Dahrendorf. The sense of the sunset clause is becoming increasingly undeniable. We should seek to further that in the months ahead.
	So I welcome many wise prescriptions of the committee about quality, but I also agree that the real issue is quantity. We can use scrutiny to produce safer law, but what we really want is abstinence. Pre-legislative scrutiny, as exemplified in recommendations in the report, should be used on a wider scale. I am disappointed that the Government are not prepared to publish the reasons why they refuse to publish any non-emergency Bill in draft.
	I suspect that a frequent reason is worrying and obvious: Ministers have not got their thinking straight enough to publish a draft. Time and again rafts of amendments have been tabled late, when they cannot be given proper Committee consideration. We have seen whole new sections added to Bills; confused drafting; Bills in one Session to correct Bills in the previous Session; skeleton Bills on to which far too much unamendable regulation is attached; and, all too often, bone-headed refusal to listen to wise advice from parliamentarians not just in this House but in another place. All those things need to be put right. Pre-legislative scrutiny can help, but it will go only so far.
	While welcoming the main thrust of the report, I shall comment on aspects of the report about which I have some doubt. I support greater use of evidence-taking committees. The House has seen their value on both the Constitutional Reform Bill, where the committee's work was commended by the noble and learned Lord the Lord Chancellor, and the Assisted Dying for the Terminally Ill Bill. However, I question whether that procedure can be generally applied to Bills that have not had pre-legislative scrutiny.
	I also have doubts about the idea that Commons Select Committees should normally conduct pre-legislative scrutiny. The noble Lord, Lord Holme of Cheltenham, made that point. I believe, with him, that there is at least a risk of Select Committees in another place being sucked too much into the process of delivering the Queen's business and finding the free-ranging independence, which is the strength that they should bring to Parliament, being diluted.
	The report is right to ask for improvements in Explanatory Notes to Bills; for more effort to demonstrate clearly the effect of amending legislation on existing statute; and the case for regular reviews of legislation. Indeed, surely the wisest of many wise things that the report states is that insufficient thought is given to post-legislative scrutiny of Bills and their effectiveness. Dozens of Bills passed with great éclat by this Government are already moribund and obsolete. Sunset clauses could well be used on sections within Acts. That would also be of great value. I should like to have seen a far more positive and creative response by the Government to all those parts of the report.
	It has been a valuable debate. Many positive ideas have issued from the report and this evening's debate. I cannot end without saying how outstanding and essential is the part that this House plays in the scrutiny of legislation—without this House, much legislation would barely be scrutinised at all—although I also agree with those who said that sometimes we miss; we do not catch everything before it gets through. So I would be very cautious about accepting too easily any second-class status for this House in the process of pre-legislative scrutiny, especially if it is to be linked to a time limit. This is a House of Parliament; why should it not be equally engaged in pre-legislative scrutiny?
	The noble Lord, Lord Carter, challenged me to say something about the Salisbury convention. He referred to the letter that I sent him before the 1997 election, when we had a House that was largely hereditary and the Conservative Party had about 40 per cent of the membership. That House has now changed. As the noble Lord, Lord McNally, explained, the Parliament Acts ensure that the Commons can prevail. But those Acts have rarely been used since this House does not seek to wreck core government legislation. That remains the position.
	As I said, however, the House of the Salisbury convention does not exist any more. Today's House was created by this Government in 1999. Labour is now the largest party and no one sits by right of birth alone. Inevitably a different House will behave differently. The Government said at the time that it should be more assertive and so it has been. You cannot put the clock back to before 1999 or even as far back as 1945.
	I am one of those who very much welcome the strengthening of this House and believe that the process should go further. But while I still accept the essence of Salisbury—namely, that the principle of Bills foreshadowed in the manifesto should be honoured—in this changed world, we will not allow the doctrine of a single party's manifestos to override the powers of this House or the pledges given to this House in 1999. I think that that very much echoes what has been said by the noble Lord, Lord McNally.
	It is also worth noting that nothing within the Salisbury convention should stop this House from proposing, agreeing and improving amendments to manifesto Bills. After all, that is what we are for. The noble Lord, Lord Carter, should not be too po-faced about the manifesto. After all, only this afternoon the Government have broken a manifesto pledge. On 5 May, Labour's manifesto said on the EU Treaty:
	"It is a good treaty for Britain and for the New Europe. We will put it to the people of Britain in a referendum and campaign wholeheartedly for a 'Yes' vote".
	Note the verb "will". And of course that pledge has now been broken.
	I finish with one final thought. This debate has shown the value of discussing the role of Parliament and the legislative process. So, may we look forward—and I think that this is the point that the noble Lord, Lord McNally, was going to make—to an early debate on the important report by the noble Lord, Lord Puttnam, and the Hansard Society on the communication of parliamentary democracy? It was also mentioned by the noble Baroness, Lady Gould of Potternewton, and other noble Lords. I believe that both the Government and Parliament would gain from early consideration of it, as I am sure we could from the report that we are debating today.

Baroness Amos: My Lords, I begin by congratulating the noble Lord, Lord Holme of Cheltenham, on opening this important debate. I congratulate also the noble Lord, Lord Norton of Louth, on his work in chairing the committee during the inquiry. Both noble Lords bring considerable expertise to this subject. I also express my thanks to Members of the Constitution Committee, some of whom spoke in the debate this evening, for conducting this inquiry.
	I am pleased to have been asked to give evidence to the committee. I have to say to the noble Lord, Lord Wakeham, that in giving evidence I reflected my views on the basis of my experience in this House.
	I have a strong belief in the need to make Parliament more effective, more transparent and more accessible. I am particularly pleased that there have been a number of recent reports on Parliament and the need for greater public engagement. Noble Lords who spoke this evening often made reference to this wider context in their remarks.
	We need to continue to look seriously at these wider issues, particularly the relationship between the two Houses, the best ways of working and how we can retain the best features of this House—in particular its flexibility and the elements of its culture of debating practice; for example, in the Committee stage of a Bill.
	However, I think that this House needs to be much more confident about looking at its practices and ways of improving them. In the time that I have been Leader of this House, I have been struck by the great defensiveness on all sides of the House about looking at our working practices. The House will have an opportunity to make a decision, for example, about whether it wants to elect a presiding officer who can be independent of government and stand up and reflect the views of this House and in particular its Back-Bench Members now that the Constitutional Reform Act is in place. I look forward to that debate as it will be an opportunity for this House to make its views clear.
	There is much that the House itself can do, if it is so minded, and in that respect I agree with the noble Lord, Lord Norton of Louth, that Parliament has a role to play that is independent of the role of government.
	The noble Lord, Lord Strathclyde said that he found the list of Bills in the Queen's Speech a dismal litany. I would take his comments much more seriously if he had ever expressed the same kind of enthusiasm about the Bills that were considered under a number of Conservative administrations. I am sure that the noble Lord did not take the same view then as he does now. I can only take his remarks as politically partisan.
	The Government are committed to strengthening parliamentary scrutiny and believe that good scrutiny leads to better legislation. But we also need to be realistic about the resources available both within Parliament and within government. It is important to recognise that governments are elected on the basis of manifesto commitments which they will want to carry out. Governments also have a responsibility to respond to new and sometimes urgent demands that arise. It is in that context that I recognise the points made by the noble Lord, Lord Dahrendorf, about Government initiating legislation. I must say that I do not necessarily agree with the noble Lord in his conclusions on the effectiveness or usefulness—in that context—of pre-legislative scrutiny. We have to get the balance right.
	The noble Lord, Lord Holme of Cheltenham, in his opening remarks, my noble friend Lord Carter and the noble Lord, Lord MacGregor, all talked about the importance of pre-legislative scrutiny, as did other noble Lords.
	The Government have significantly increased the number of Bills published in draft for PLS: 49 draft Bills have been published since 1997. I say to the noble Lords, Lord Holme and Lord Norton, with respect to the publication of Bills in draft, that we have to an extent become victims of our success. We have built up the number of Bills published in draft each Session so successfully that it would now be difficult to give any guarantees that we can continue the year-on-year increase. It is in that context that the response was drafted as it was.
	The number of Bills introduced in draft has risen from three in 1997-98 to 11 in 2003-04. That is an increase by a factor of four. I cannot promise to continue that rate of increase, but in no way does that take away from the commitment made to try and publish Bills in draft.
	It would also be important to touch on resources. It would present your Lordships' House with an unprecedented burden on available resources, including Members with which to people committees. I note my noble friend Lord Carter's point about the impact on resources, which is similar to the point that I made, while my noble friend Lady Gould made the comment that finding noble Lords to participate would not, in her view, be a problem.
	The response make clear that we will seek at least to maintain the proportion of Bills published in draft. We continue to be committed to pre-legislative scrutiny.
	On the criteria used to assess whether Bills should be published in draft, we look at the readiness of the Bill, the date by which it is required to be enacted, whether there is sufficient time for pre-legislative scrutiny before introduction and, of course, the overall needs of the legislative programme.
	The noble Lords, Lord Holme and Lord Strathclyde, and my noble friend Lady Gould were also disappointed that the Government had not accepted the recommendation that the reasons for not publishing a draft Bill should be outlined in the Explanatory Notes to a Bill. We carefully considered that but felt that it would inevitably become formulaic and thus serve no useful purpose. The reasons are usually time pressure, demands on parliamentary counsel and the priority of other Bills.
	However, we accept the committee's recommendation that Explanatory Notes that give effect to EU obligations should provide detail of the scrutiny history of the measure. We are happy to do that, not least because the members of your Lordships' European Union Committee and its sub-committees perform valuable work on behalf of this House in scrutinising legislative proposals from the European Union. It is right that their work will now contribute to the scrutiny of Bills that give effect to those proposals.
	The committee supports the principle of carry-over and endorses the view that there should be a rolling legislative programme. That is very welcome. We envisage using carry-over for a few Bills each Session, as appropriate. In this House carry-over is subject to the agreement of the usual channels.
	My noble friends Lord Carter and Lady Gould and the noble Lord, Lord MacGregor, talked about the possibility of moving from a sessional approach towards a rolling programme of legislation. I can see the arguments for that but I think that there would be some resistance to doing away with Sessions altogether. Understandably, the Opposition see the sessional cut-off as a control of the Executive. However, I note that many other parliaments do not have Sessions, without ill effect. I should take this opportunity to make clear that we have no plans to alter current procedure for State Opening or the Queen's Speech.
	My noble friend Lord Carter and the noble Lord, Lord Elton, mentioned the proposals in the Labour Party manifesto with respect to the 60-day cut-off for Lords consideration. The proposal reflects the longstanding parliamentary convention, endorsed by the Wakeham report, that Her Majesty's Government are entitled to have their business considered by this House in reasonable time. It is not a new idea; something like it is part of the constitution of many countries with two-chamber parliaments, and it featured in the abortive attempt to reform this House in 1968. It would have the beneficial effect of making governments less wary of starting serious Bills in this House and making it harder for departments—I shall mention no names—to continue rewriting their Bills until Lords Third Reading.
	If the noble Lord, Lord Elton, would care to look at the manifesto, he will see that the proposal refers to the House of Lords but is actually about the conventions between the two Houses. That is why the proposal is for a Joint Committee.